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Here are a few reasons that build on @Dismalscience's answer. Capital requirements: Banks don't typically need to hold capital against loans they originated but subsequently moved into an SPV. This might be regulatory arbitrage but it might be a socially efficient outcome meant to move assets and liabilities out of the banking system. Market segmentation: ...


4

SPVs are typically used in MBS issuance to get the loans off the issuing bank's balance sheet, freeing up that balance sheet space to make more loans and providing bankruptcy-remoteness (i.e., the SPV would continue to function even if the issuer went bankrupt) to investors. This is why a securitizing bank would transfer loans to an SPV. However, given ...


4

You've just reinvented bearer bonds. From that page: Bearer bonds are bonds that are owned by whoever is holding them, rather than having registered owners like most other securities. Like most other bonds, they have a stated maturity date and interest rate, but coupons representing interest payments are generally physically attached to the security and ...


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I typed "shareholders of record" into Google, and I got Stockholder of Record Also known as shareholder of record, record holder or owner, or registered holder, or owner. The stockholder whose name is listed on the company's books and records as the owner of shares as of a particular date (the record date). A stockholder of record holds stock in a ...


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Investors are not paying to hold Treasury bonds (yet), nominal yields are still positive (but that could change...). All that is happening is that inflation-protected securities are guaranteeing a return less than CPI inflation. This is not that much of a mystery: there is no way to buy the CPI index (other than trading inflation derivatives). You can buy ...


2

Let's start with the statement - 'Consider the commodity exchange where the futures price of a commodity is determined by supply demand during trading hours and is not directly determined by the real price' first, this statement is not accurate. Not everyone that buy a commodity future ever intend to take delivery. Second, you need to look at financial ...


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The following link was provided: Link to Moroccan news article, in French My French is somewhat rusty, and I am completely unfamiliar with the structure of the Moroccan financial system. But I think I understood the basic idea. As a result of the worries around COVID-19, there was added demand for liquidity in the banking system. The Treasury sits on a ...


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Depends on the structure. In the US, most residential MBS are pass-through, so the MBS is prepaid. In Canada, MBS are (or at least were) mostly packaged into non-passthrough structures, so MBS cash flows follow fixed coupon schedule. There are prepayment penalties which are used to absorb the cash flows. My understanding is that European pfandebriefe ...


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Actual securitization would be impractical for a number of reasons, but secondary market transactions of shares in hedge funds do occur with the consent of the funds in question (though it’s not a particularly liquid market). Using these shares as collateral would not generally be practical, as they’re not assignable interests.


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One "natural" approach would be to base the price on the expected discounted revenue stream. Writing $R_t$ as the (random) revenue in period $t$ of one share, this then would be: $$ p_t = \mathbb{E}\left(\sum_{t = 0}^T \frac{R_t}{(1+r)^t}\right) = \sum_{t = 0}^T \frac{\mathbb{E}(R_t)}{(1+r)^t}. $$ In addition, you might want to lower this price a ...


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@EnergyNumbers aptly points out that Bearer bonds do exist and act in some way as a currency like you are describing. This does not answer the question of why aren't bearer bonds used instead of fiat currency? First we should understand what a bearer bond is. A bearer bond (or any bond really) entitles its holder to fixed payments over years (coupon ...


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It does not make sense to compare a generic commodities future with a generic stock future, because neither of these things exist. Different derivatives have different volatilities, that much is true. The Black-Scholes model enables one to quantify how much volatility is priced into a derivative, as long as you know the price of the derivative, the ...


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