Intro. to Asset-Backed Securities, CFA Level I, 2019 Prep



Fixed income, known to be one of the largest segments of global financial markets has been rated as one of the most difficult courses by most CFA candidates. Thiscourse is divided intothree sections as follows:The first section explains securitization, itsbenefitsfor economies and financial markets,and identifies the parties involved in the process and their roles.The second section discusses the types and characteristics of residential mortgage loans as a precursor to understanding mortgage-backed securities.The third section introduces anddescribes the types and characteristics of residential mortgage-backed securities (RMBSs)such as mortgage pass through,prepayment speed, weighted average life, and the inherentprepayment risk.The fourth sectionexplainscollateralized mortgage obligations (CMOs), risks such as contraction and extension risksand the different CMOstructures such as sequential pay tranche, planned amortization class tranche, support trance, etc used inmanagingprepayment risk, and the cash flows and risks ofeach type.The fourth section discusses non-agency residential mortgage-backed securities, types of credit enhancements as well as commercial mortgage-backed securities.The last section introduces collateralized debt obligations (CDOs) and this is followed with practice questions and quiz to reinforce the concepts learned throughout the course.