And you end up with a mortgage backed security.

Mortgage backed security.

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

I have a whole video on mortgage backed securities.

I think it's a distraction.

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

And this guy's an investment bank instead of a commercial bank.

Andrew,you'll analyze the SEC filings.

They have good credit etc etc.

There might be a whole other class of investors here, say this guy.

And we said there's different kinds of debt.

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

And these shares would be called Mortgage Backed Securities. or sometimes MBSes.

Liquid means it's very easy to buy and sell those securities in large quantities.

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.

But we have to start with the basics.

Some of them are going to pay ahead of time.

But essentially what happened is the investors in the mortgage backed securities provided the money to the special purpose entity to essentially loan to the borrowers.

Annual rate of security

It seems the government's looking for Harry.

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

I make are to the bank.

We would lower standards on what it took to get a mortgage.

So the person who constructed this whole collateralized debt obligations and who sold these tranches to the public markets, and this process by the way is called securitization, because you're creating securities out of these assets that you sell to everyone, maybe the Chinese, or whoever, sovereign wealth funds.

Do Low Interest Rates Ensure High Asset Prices?

And that's why they are called derivative instruments.

learning only too late that something was wrong.

And it makes sense.

So its assets.

In contrast, the Federal Reserve's credit easing approach focuses on the mix of loans and securities that it holds and on how this composition of assets affects credit conditions for households and businesses.

lot of hand waving saying, oh, it's a more complicated form of security.

And the cash flow will come back to it.

You group them all together.

That assets, A for assets, is equal to

But it is just like a stock.

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

Malibu Equity and Investments.

like any corporation, and they have to, the liabilities, plus the equity has to match up to the assets.

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

They'd start with your bonds preferred stock, and then move on to real estate.

What's my current state of affairs?

But based on the model that we just constructed, I think the real return we're going to get on this mortgage backed security is 9 .

Sekiguchi is in a movie distribution company, and Saki is in a international brokerage firm.

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

I don't want to draw this box.