# Debt Securities

Paper, Order, or Assignment Requirements

Homework II 1) In the article “Credit Default Swaps and Structured Credit: A Primer for Wealth Managers” by Jeffrey T. Prince, CFA, he recognizes five problems that were associated with the collateral that was used to create ABS CDOs. (25 points) a) Name and discuss briefly the five problems associated with the collapse in the ABS CDO market. Note the collapse was due to the very high default rates experienced by ABS CDOs. The five problems or issues are said to be the reason default rates were so high. b) The article also briefly mentions two opposing views as to who, in general, was at fault for the bubble. Please list and briefly describe the two opposing views. Which viewpoint does the author agree with? c) What was, or is, the “Anthos Funding” deal? Describe it in brief terms. What are its unique characteristics? Why is it mentioned in the article by Mr. Prince? 2) In class, we constructed a CDO utilizing three bonds. We saw that by utilizing “pooling”, and “prioritizing” default claims, we created securities with attractive characteristics. Essentially, we “re-packaged” existing debt that is “pari passu” into priority claims on the collateral of the pool. The result is, a portion of the issued debt has reduced probability of default and is of higher quality than the collateral of the pool – that securitizes the debt. (75 points) a) Assume you purchase four bonds. Create a CDO and issue four tranches of bonds. Model the pool and display the probabilities of default, the pay-offs, and recovery rates. Calculate the current price of each bond and the YTM. Calculate the total market value of the pool. Collateral: 1) The collateral has a total value of 400 with 100 allocated to each bond 2) Bonds are risky, speculative grade bonds 3) Defaults are independent and occur only at maturity 4) At maturity, each bond pays 100 5) Each bond has a 15% probability of default 6) Each bond has a 30% recovery rate 7) Risk free rate is 5% b) Issue four tranches of bonds, the size of each tranche will be as follows:1) Senior Tranche ? 2) Mezzanine Tranche ? 3) Subordinated Mezzanine Tranche ? 4) Subordinated Tranche ? c) Calculate the price, YTM, default probability and recovery rates for each issue. Were you successful in creating a CDO with superior characteristics than the individual bonds? d) Why do we assume defaults are independent? The attached spreadsheet displays the format and necessary calculations. Please follow this format

# Our Service Charter

1. ### Excellent Quality / 100% Plagiarism-Free

We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
2. ### Free Revisions

We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
3. ### Confidentiality / 100% No Disclosure

We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
4. ### Money Back Guarantee

If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
5. ### 24/7 Customer Support

We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

or