Intro. to Asset-Backed Securities, CFA Level I, 2017 Prep

Course details

Fixed income, known to be one of the largest segments of global financial markets has been rated as one of the most difficult courses by most CFA candidates. This course is divided into three sections as follows:

The first section explains securitization, its benefits for economies and financial markets, and identifies the parties involved in the process and their roles.

The second section discusses the types and characteristics of residential mortgage loans as a precursor to understanding mortgage-backed securities.

The third section introduces and describes the types and characteristics of residential mortgage-backed securities (RMBSs) such as mortgage pass through, prepayment speed, weighted average life, and the inherent prepayment risk.

The fourth section explains  collateralized mortgage obligations (CMOs), risks such as contraction and extension risks and the different CMO structures such as sequential pay tranche, planned amortization class tranche, support trance, etc used in managing prepayment risk, and the cash flows and risks of each type.

The fourth section discusses non-agency residential mortgage-backed securities, types of credit enhancements as well as commercial mortgage-backed securities.

The last section introduces collateralized debt obligations (CDOs) and this is followed with practice questions and quiz to reinforce the concepts learned throughout the course.