A measure that is used by credit rating companies to determine the credit quality of a portfolio. This measure allows rating companies to look at a portfolio as a single security, and assign it a single rating.WARFs are most often calculated by rating companies for collateralized debt obligations (CDOs). To calculate the WARF on a CDO the rating agencies must first calculate … [Read more...]
What is a synthetic CDO?
A synthetic CDO is a complex financial security used to speculate or manage the risk that an obligation will not be paid (i.e., credit risk). It is a derivative, meaning its value is derived from events related to a defined set of reference securities that may or may not be owned by the parties involved. A synthetic CDO is typically negotiated between two or more counterparties … [Read more...]
Understanding Mortgage Fraud
What is Mortgage Fraud? Mortgage fraud is a term used to describe a broad variety of criminal actions where the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan than would have been obtained had the lender known the truth. In federal courts, mortgage fraud is prosecuted as wire fraud, bank … [Read more...]
Chicago Board Of Trade – CBOT Explained
Chicago Board Of Trade - CBOT A commodity exchange established in 1848 that today trades in both agricultural and financial contracts. The CBOT originally traded only agricultural commodities such as wheat, corn and soybeans. Now, the CBOT offers options and futures contracts on a wide range of products including gold, silver, U.S. Treasury bonds and energy. The CBOT has … [Read more...]
What is a Mini-Sized Dow Options?
Mini-Sized Dow Options is a highly leveraged index option on a futures contract in which the underlying index is the Dow Jones Industrial Average. The option has a multiplier of five, meaning that the option allows one to buy (for a call) or sell (for a put) up to five times the value of the DJIA. This allows one to profit from the option for a lower price than one would … [Read more...]