What is the difference between a “mortgage” bond and a “mortgage-backed” bond?

Solutions

Expert Solution

Answer : Difference between 'Mortgage Bond' and 'Mortgage Backed ' Bond :

Mortgage bond is a type of Bond which is secured against any property and the investor is subject to make the mortgage payment.In the event of default the holder of the mortgage bond holder sell the mortgaged property .

But Mortgage Backed Bond is the different concept.It actually is the pool of Mortgage. It is a kind of Derivative security.The Mortage Bond with the similar features relating to maturity , coupon , timimg of paymentsa are grouped together to form a Mortgage backed Bond which then could be sold to the buyer of sizable investment.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

what is the difference between a Mortgage Backed Security and a Collateralized Debt Obligation? Explain with...

what is the difference between a Mortgage Backed Security and a Collateralized Debt Obligation? Explain with reference to the source of the funds from which investors will be repaid.

explain the general difference(s) between residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities with respect to...

explain the general difference(s) between residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities with respect to the underlying collateral (physical real estate, not the loans).

What is the difference between a 'debenture' Bond and a 'mortgage' Bond? What is ‘Operating’ Leverage?...

What is the difference between a 'debenture' Bond and a 'mortgage' Bond? What is ‘Operating’ Leverage? What is ‘Financial’ Leverage? What is the relationship of leverage to risk? What is the preferred order for corporations obtaning long term financing? What is corporate ‘internal’ financing?

What are mortgage-backed securities, why were they developed, what types of mortgage backed securities are there,...

What are mortgage-backed securities, why were they developed, what types of mortgage backed securities are there, and how do they work?

What are the differences between mortgage and mortgage-backed securities? Can moral hazards still exist if there...

What are the differences between mortgage and mortgage-backed securities? Can moral hazards still exist if there is no information asymmetry? If your friend borrows from the bank at 9%, why would you be more willing to lend to the bank at 3% instead to your friend at the much higher interest? How do conflicts of interest make the asymmetric information problem worse, esp. in financial markets?

What is a mortgage pay-through bond (MPTB)? How does it resemble a mortgage-backed bond (MBB)? How does it differ?

what is the difference between asset backed and asset based and what is the consequences to...

what is the difference between asset backed and asset based and what is the consequences to the ownership if sukuk is default

a. What are the pros and cons of asset-backed securities such as mortgage-backed securities to the...

a. What are the pros and cons of asset-backed securities such as mortgage-backed securities to the retail or institutional investors? b. What are the roles played by various financial institution(s)? c. Mutual funds have been gaining popularity among investors. From the investors’ point of view, illustrate why it is usually a better choice to buy the mutual funds than to buy asset-backed securities.

A 10-year maturity mortgage-backed bond is issued. The bond is a zero coupon bond that promises...

A 10-year maturity mortgage-backed bond is issued. The bond is a zero coupon bond that promises to pay $10,000 (par) after 10 years. At issue, bond market investors require a 15 percent interest rate on the bond. What is the initial price on the bond? (A) $2,252 $2,472 $8,696 $10,000 Answer is A but I don't know how to do it. Please explain using financial calculator step.

What is the difference between commodity, commodity backed and fiat currency? What are the positives and...

What is the difference between commodity, commodity backed and fiat currency? What are the positives and negatives of using each type?

Subjects