Canada does not have an institution like Fannie Mae that securitizes mortgages. How do you think...

Canada does not have an institution like Fannie Mae that securitizes mortgages. How do you think this fact affects the types of mortgages offered by Canadian banks? (Hint: Think about interest-rate risk.)

Solutions

Expert Solution

The securitizes martgages is considered to be one of the risker assets espeically after financial crisis of 2008. Canada which does not have such an institute will affect the mortagages offerred by the banks. As we know bond owners face the risk of interest rate due to fluctuating interest rate. The price of the bond depends upon the sensitivity of its interest rate in the market. It is volatile as per interest rate prevailing in the country. A securitized mortgages is different layer of debt offered to the investors. The risk is shared by the different owners. It is pool of resource consisting of fifferent owners. The risk is distributed among different investors. So, the absence of such an institute affects the types of mortgages offerred by the banks.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Why does the government sponsor agencies like Ginnie Mae, Fannie Mae, and Freddie Mac?

Define, describe and provide examples of the differences of Fannie Mae, Freddie Mac, and GNMA mortgages...

Define, describe and provide examples of the differences of Fannie Mae, Freddie Mac, and GNMA mortgages their underwriting guidelines and specific secondary market needs and requirements. Provide examples and application of each

How do agencies such as Fannie Mae and Freddie Mac allow individual mortgage holders to collectively...

How do agencies such as Fannie Mae and Freddie Mac allow individual mortgage holders to collectively benefit from the agencies’ access to the capital markets? Does this access result in lower mortgage rates than would otherwise be the case? Are consumers able to have greater access to mortgage opportunities? Why or why not?

Describe the Second Transmission Mechanism involving the Federal Reserve, Freddie Mac and Fannie Mae and how...

Describe the Second Transmission Mechanism involving the Federal Reserve, Freddie Mac and Fannie Mae and how the U.S. money supply increases through this mechanism?

1) "How do you think of yourself? Do you feel like you are more male or...

1) "How do you think of yourself? Do you feel like you are more male or female?" This question is asking about a person's a) gender Identity b) gender role c) sexual orientation d) biological sex 2) A baby was recently born who had very ambiguous genitals. The doctor did a genetic test to find out the sex chromosomes of the baby. It turned out that the child had XX sex chromosomes but must have been exposed to unusually high...

What do you think it was like on the Lewis and Clark Expedition? Would you have...

What do you think it was like on the Lewis and Clark Expedition? Would you have liked to go along with them?

do you think laws in canada deter criminal behaviour

What does research ethics mean to you? Do you think that it is important to have?...

What does research ethics mean to you? Do you think that it is important to have? Why or why not?

How do you think about this argument? I think the EMH does hold in the stock...

How do you think about this argument? I think the EMH does hold in the stock market in the long run. However, in the short run I am not sure how much the EMH holds up. I believe that mispricing can occur in the short run. The EMH can be challenged with the ideas of momentum investing, behavioral finance, and fundamental analysis. In a truly efficient market, there should be no serial correlation among stock prices, but momentum investors would...

Why do you think that certain people have been unable to become wealthy? How does someone...

Why do you think that certain people have been unable to become wealthy? How does someone become wealthy?

Subjects