We would create incentives for securitization.

I have 4 billion in residential CDOs, collateralized debt obligations.

I have a whole video on mortgage backed securities.

My next presentation, I'm going to take it to a further

So that's what we're going to show you in the presentation on collateralized debt obligations.

And because it's a junkier rating, no one is going to want to buy it.

But you should watch the videos on mortgage backed securities and collateralized debt obligations, if you want to get a better understanding of exactly how the money flows go.

And you end up with a mortgage backed security.

Of course, if enough people start defaulting, even these people start to get hurt.

So these shares each of these one million shares this is a mortgage backed security.

I think it's a distraction.

The 400 million senior tranche we raised from 1000 senior securities, collateralized debt obligations.

So just in kind of our everyday personal finance world, your mortgage is actually secured debt.

Word is that davis' fund has taken some big hits on mortgagebacked securities.

Savings bonds.

They're savings bonds.

So a security in the equity world is a stock.

Or they might even start to buy things that aren't Treasuries.

That's how loans worked before the mortgage backed security industry really got developed.

So it's essentially this is an IOU from Company XYZ.

There is a price.

But we have to start with the basics.

Some of them are going to pay ahead of time.

levels of seniority.

And if buying debt seems like a weird thing to say, buying debt is the same thing as lending money (lending money).

You would get 100 million.

But anyway, this isn't the crux of it either.

I make are to the bank.

So it's going to be 6,000 times 1,000 bond certificates.

And that's why they are called derivative instruments.

You might just want to watch the video on mortgage backed securities and collateralized debt obligations if you need a refresher there.

You can't get it on Yahoo!

It can do it through debt or equity.

What we are going to do is go buy things like highly rated mortgage backed securities, or things like commercial paper, AAA corporate debt, so that those things, the interest on those things goes down.

And the cash flow will come back to it.

You group them all together.

Mortgage backed security.

There's very little chance of them defaulting on their loans.

Leverage.

You'd have to sell that loan to someone else.

It might have been structured so that Corporation A right here, before even issuing the bonds, they include this insurance with the bond.

But kind of the one that people always talk about, I guess in the same phrase, is bonds.

So there's no way for him to invest in this security and to get better returns.

So let's make some very simple assumptions for ourselves.

So this one might be called senior secured debt.