Sub-prime Mortgage Derivative Tutorial

Posted by Bull Bear Trader | 4/27/2008 03:09:00 PM | , , , | 0 comments »

I often get asked about subprime, Colateralized Debt Obligations - CDO, Collageralized Mortgage Obligations - CMO, Credit Default Swaps - CDS, and that odd thing called a tranche by people other than my students - who already had to endue my lectures on the subject. Therefore, I figured it was worth putting together something for the blog, outside of what I normally teach. Hopefully I can find the time to develop and post a series of tutorials this summer, but in the mean time the following short segment from CNBC's PowerLunch is a good start regarding subprime and the creation of mortgage-backed derivatives (such as CMOs).



There are other explanations (videos and Powerpoints) that are more entertaining and a little less tasteful at times (and also sometimes better at explaining the subject), but I will take the high road for now and let you find those on your own. A few longer presentations that are more informative, but also a little dryer, also exist.

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