Collateral mortgage obligations Essay Example | Topics and Well Written Essays - 16250 words

Collateral mortgage obligations - Essay Example This descriptive research aimed at studying the numerous valuation methodologies of prepayment speeds with Collateralized Mortgage Obligations (CMO) tranches in order to analyze the importance of these valuation methods in dealing with the complexities of the current economic scenes. The chief objective of the study mainly scrutinized the relevance of these CMOs to the current economic situations. Collateralized Mortgage Obligations have been referred to as claims that arise from cash flows from large pools of home mortgages. The CMOs are designed such that principals and interests once received from mortgage holders are distributed to the tranches. As debt derivatives, they provide retail and institutional investors the possibility of higher yields with a Standard & Poor ratings AA or AAA ratings. CMO present interest rate risk, as well as prepayment risk that make it very sensitive. The 2007 financial bubble was one of the reasons that led to the decline in CMOs due to their inabil ity to prevent the above mentioned risks. Therefore, the study set out to establish a standardized valuation model for CMO retail custodian platforms using historical data from FNMA, collection of empirical data from direct observation and unstructured questionnaires from the FINRA firms. From the investigation of the two major forms of valuation, namely ‘Fixed-rate mortgage’ and ‘adjustable –rate credit valuation’ methodologies, it was possible to actually determine a standard valuation of a five-tranche CMO that can be applied to the pricing model. This proposed quantitative descriptive research study discusses the various valuation methodologies of prepayment speeds with Collateralized Mortgage Obligations (CMO) tranches and analyzes the way the prevalent valuation methods are useful in current complex economic scenarios. The objective of this study is primarily to examine the applicability of various methods of valuation for pricing the CMOs so as to determine their

Financial viability within a health care organization Essay

Financial viability within a health care organization - Essay Example On the other hand, finance deals with concepts, methods, and principles of managing the relevant accounting data for the purposes of attaining certain goals for the business or any given organization (Wiedemann, 2009). Finance involves an aspect of management precisely because it anchors on decision making using available information. Generally, the process of financial management involves the determination of a range of factors that determine the performance of a business or organization. Alternative definitions have explained the difference between accounting and finance by terming finance as a decision science, which relies on the rational methods and means supplied by accounting to arrive at informed decisions, which appertain to the performance of an organization (Wiedemann, 2009). Some theorists have extended this definition to infer that accounting is subordinate to financial management to the extent that it supplies the raw data on which it builds its synthesis. However, experts emphasize on the complementary relationship between the two fields with clear demarcations of areas of specialization. Finance is largely used within the ranks of management although it applies to all levels that have particular interest in financial predictions, budgeting, risk analyses, performance projections, and many other attributes the determine the daily running of businesses and non-profit organizations. The multiple natures of application of the theories and principles of fin ance lend itself to various interpretations in connection with nature of processes and type of organization. The accounting processes and financial management in a healthcare sector are special and different from the usual processes as they relate to normal businesses. According to some financial analysts, the major distinguishing aspect of healthcare finance and accounting is that sources of income are not directly connected to the beneficiaries of