Is Collateralized debt obligation a good investment? Please explain in details.

Q: Do you agree with the statement: "Investors view debt as a signal of firm value"? Why? Briefly…

A: Debt is the amount of money that is owed by an organization to a third party, that is, the amount of…

Q: In what way does leverage increase the riskiness of a loan?

A: The advantage a financial specialist or investor gets from utilizing debt is called financial…

Q: What role do interest rates play in allocating capital to different potential borrowers?

A: Rate of interest : It is the amount paid by a borrower to use the capital borrowed from the…

Q: Explain how to account for the impairment of an available-for-sale debt investment.

A: Debt Investment:   A debt investment involves loaning out the money to an institution in exchange…

Q: Equity financing is the borrowed funds from outside sources like loans, bonds and mortgages. True or…

A: Corporate finance is referred as the decision of the firm to take capital investments and other…

Q: Illustrates cash flow patterns that are important when evaluating mortgagepass-through securities?

A: Mortgage pass-through securitiesSecurity is formed when an individual or number of mortgage holders…

Q: Explain the risks of holding debt and equity from the point of view of an investor.

A: Debt investments are generally fixed yielding instruments such as bonds, company deposits, etc.…

Q: The finance function is primarily interested in the relationship between the risks of investments…

A: As per the guidelines, only one question is allowed to be solved. please resubmit the question…

Q: What is a bond sinking fund? What is the purpose of establishing a sinking fund? Are bonds that…

A: A bond sinking fund is the total amount of cash kept in a fund that will be used to retire a bond…

Q: ExplainValuing REITs as Investments?

A: Valuing REITs as investments: A typical way for the calculation of REIT is to find the Net asset…

Q: How is Collateralized debt obligation created. Plelase explain in details

A: Collateralized debt obligation (CDO): Collateralized debt obligation (CDO) is the bundle of loans…

Q: Explain an example of debt investment.

A: Debt Investment Debt Investment is refer as when the company raises the money by selling the debt…

Q: Why bonds is an investment opportunity and its benefits to bondholder?

A: Bonds are safe investment for investors and it is form of debt provided by investors to companies.…

Q: Debt also can be an advantage. How can be a debt can be advantage?

A: Debt Financing:   It is the money borrowed by the business from outside sources. This source of…

Q: What are the differences and similarities between debt financing and equity financing?

A: Similarity between debt and equity finance. 1 Both bonds and equity are traded in market. 2 Prices…

Q: What is credit enhancement, and what effect does it have on debt costs?

A: Credit enhancement represents the strategy that improves the business' credit risk profile. It helps…

Q: What disclosures are required relative to long-term debtand sinking fund requirements?

A: Long-term debt is the amount owned by the company for a period of one year from the date of the…

Q: What part of a firm's balance sheet can be used as collateral?

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: What is the difference between Direct and Indirect Financing?

A: Difference between direct financing and indirect financing are as follows

Q: What are some factors that financial managers consider whenchoosing the maturity structure of their…

A: The factors need to be considered by the manager when selecting the maturity structure for the debt…

Q: Explain Loan Amortization Patterns?

A: A loan amortization pattern, as made by an amortization calculator, maybe a table enumerating each…

Q: What are noncash investing and financing activities?Give one example.

A:

Q: What is the price paid to borrow debt capital called?

A: The amount that is borrowed by the company from financial institutions, banks, or by issuing the…

Q: Explain the Leverage and the Incremental Cost of Debt with example?

A: Leverage – Leverage is a financial term it means using the debt for their financial needs and…

Q: What are the financing borrowing activities?

A: The statement of cash flows is the statement which shows the change in the cash and cash equivalents…

Q: Why would an investor-borrower want a participation loan?

A: SOLUTION:- Participation loan: it is a kind of loan in which lender participates in the net…

Q: Describe the basic methods of debt financing?

A: Every company has two major types of financing one is through raising equity shares and the other is…

Q: What do we call the cost that a borrower must payto use debt capital?

A: Debt capital is the capital that is borrowed from various financial institutions or other lenders…

Q: From the standpoint of an Investor, is equity or debt riskier? Explain.

A: Investors are who wants to earn some profit on investment but investors are always concerned with…

Q: How Grantor can Release from Assumed Debt?

A: Answer: Release of grantor from assumed debt: It is one of the assumptions of mortgage. When a…

Q: Explain equity participation loans?

A: Equity participation loans refer to the situation where the owner or lender will reduce the interest…

Q: Distinguish between a primary and secondary capital market and discuss the role played by these…

A: Every business firm needs finance to operate its business. Therefore, the capital market is the…

Q: How is Borrowing capitalized

A: Ans. Borrowing costs are interest and other expenses or costs that an entity incurs in connection…

Q: Explain the term Motivations for Investing and types of investments?

A: Making investments in securities is a good method to mobilize the savings and earn a regular source…

Q: Discuss how a form of debt can be classified as both Current and Long-Term Liabilities.  Why do…

A: Long Term Liabilities are the liabilities that become due for more than one year. They are the…

Q: Explain Amortization Schedules and Callable Loans?

A: An amortization plan or schedule may be a total table of periodic advance installments, appearing…

Q: What is informal debt restructuring?

A: Debt restructuring is a method wherein a company or an entity experiencing financial distress and…

Q: What are call provisions and sinking fund provisions? Do these provisions make bonds more or less…

A: Call provision is an agreement on the bond, that the issuer of the instrument has the right to…

Q: Explain the Market Value of a Loan?

A: The market price of Debt refers to the value investors would be willing to shop for a company’s debt…