An Asset-Backed Security (ABS) is a financial instrument that is backed by a pool of assets such as mortgages, loans, or receivables. These securities are often enhanced through credit enhancements like bank letters of credit or insurance, which improve their credit quality.
A Bearer Instrument is a type of security that does not record the owner's name on the instrument itself, making it payable to whoever physically holds the instrument.
A call option is a financial contract that gives the option buyer the right, but not the obligation, to purchase a specific quantity of an asset at a predetermined price within a specified time period.
A derivative is a financial instrument whose value is based on the price of another underlying asset. Derivatives are commonly used for hedging, speculation, and arbitrage purposes to mitigate risk or enhance potential returns.
Face value refers to the nominal or dollar value stated on financial instruments, such as bonds, stocks, or mortgages. It is a fixed amount, unaffected by fluctuating market prices.
In the realm of real estate, 'irrevocable' refers to a commitment or agreement that cannot be changed, withdrawn, or undone once it is established. This term is commonly used in the context of legal and financial documents where permanence is crucial.
A level-payment income stream refers to a series of equal payments made at regular intervals over a specific period of time. It is typically associated with annuities, mortgages, or other financial instruments.
A Mortgage-Backed Security (MBS) is a type of asset-backed security that represents a claim on the cash flows from mortgage loans, primarily on residential property. These securities are created by pooling together various mortgage loans and then selling the subsequent payment streams to investors.
A mortgage-backed security (MBS) is a type of financial instrument that is secured by a pool of mortgage loans, offering investors income streams derived from these mortgages.
A loan typically used outside the United States, whose payments are adjusted according to the rate of inflation, making payments predictable in terms of real value.
Securitization is the process of pooling various types of debt—including mortgages, car loans, or credit card debt—into packaged securities that can be sold to investors.
A tranche refers to a piece, portion, or slice of a deal or structured financing. Each tranche offers a different risk-reward ratio to suit different investor appetites.
A voluntary lien is a claim on a property that the owner agrees to, commonly seen in the form of a mortgage. Unlike involuntary liens, which are imposed without the owner's consent, voluntary liens are willingly granted by property owners to secure debt.
