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Bank Risk Management and Collateralized Debt Obligations

Bank Risk Management and Collateralized Debt Obligations. Part I: The case against securitization: CDOs an exception to the rule? Part II: Copula exercises Collateralized debt obligations -CDOs- are well known instruments in the financial industry however as being one of the principal triggers of the global financial crisis -GFC- causing more than $1.3trillions losses (IMF, 2013). They originate through a process called securitization, involving the pooling, “slicing” and repacking of debt-instruments into innovative products. Although the whole sector of securitized products came under fire in the aftermaths of the crisis, the process provides important benefits for both banks and investors. On the bank’s side the transfer of securities and thus risks to a special vehicle purposes -SVP-, it improves balance sheet management by decreasing capital requirements for regulatory purposes, as well as improving liquidity from selling to a wide range of investors and can constitute a source of long-term funding and finally allow to transform illiquid assets into securities (OECD, 2011). On the other hand, investors can choose investments according to their risk profile while enjoying diversification effects as different types of loans, with different investment grades and different maturities are brought together (2011). The purpose of this paper is to establish the reasons why benefits turned into doom at the wake of the GFC, section 1 will examine structure of popular CDOs and point their role in the GFC, section 2 examine CDOs structural complexity supported by evidences while section 3 focus on remedies. Section 1. Role in the GFC CDOs have been around since 1987 however it is only for the period 2000-07 that issuance boomed as denoted in figure 1 (IMF, 2013). Indeed, low interest rates -1%- set by the FED back in 2001 together with the 1995 community reinvestment act allowed individuals with no prior or poor credit history to access funds for home-buying purposes and therefore encouraged subprime growth. Their issuance grew to reach $600bn from $100bn for the period 2000-06 and accounted for 20.6% of the total mortgages by 2006 (2013). Fig. 1 Global issuance by type of securitized products Source: IMF (2013) Those mortgages loans were then securitized into assets backed securities -ABS- and divided into tranches (see fig. 1.2); senior, mezzanine and equity. The latter, called the leveraged or unsubordinated, carried the higher return but was the first to absorb losses in case of default followed by mezzanine and so on. The most senior, the thicker and safest received the highest rating AAA (see appendix 1 for ratings details) and then was sold to investors while unbought, riskier mezzanine tranches could be re-securitized through financial engineering into AAA CDOs senior tranches (Fligstein and al., 2010). CDOs are thus by definition claims on ABS cashflows, which themselves are claims on mortgages. Squared and cubic CDOs were produced in a similar fashion. The higher yield on senior tranches despite similarly rated US treasury securities implied more risk thus those ratings were in fact inflated, a direct consequence of “ratings shopping”. Credit rating agencies -CRAs-, institutions responsible to assess creditworthiness of borrowers derived colossal revenues from structured finance products thus created an incentive towards upward bias and contributing to increase systemic risk. Moody’s 2006 total revenue from securitization accounted for $881bn, more than its combined profits in 2001 (IMF, 2013). The reason the GFC has been so hard to predict is because elements from the along the securitization chain -including inflated ratings- all had participated in increasing systemic risk without regulators, investors and issuers being fully aware of the situation. As adjustable interest rates on mortgages reset higher to 5.25% in 2006 (Fligstein and al., 2010) prime borrowers started to default on their obligations and the large supply of houses in the market caused prices to decline and huge losses started to emerge for banks, which were left of illiquid assets. The collapse of the CDOs market damaged other ABS reputation as denoted in figure 1.3. CDOs lost 72.5% of their par value in spite of their small account in the securitized market (ABDI, 2010). The next section will tackle CDOs complexity while demonstrating that securitization itself is not necessarily bad but rather dependent on the type of product. Fig 1.2 ABS and CDOs structure Source: IMF (2012) Fig 1.3. Structured finance: mtm losses Source: ADBI (2010) Section II. Empirical CDOs structure is complex but when that same structure is continuously enhanced to meet certain credit standards, risk spreading all level becomes uncontrollable. At some point, simulations determined whether a tranche could withstand a certain level of default thus could earn a higher rating (ABDI, 2010). Overcollateralizing -several collaterals for a single security- and CDS -insurance against default- became popular credit enhancement methods. The average investor cannot associate risk and returns anymore caused by asymmetric information thus making adequate risk valuation and management challenging. CDOs and ABS being sisters but not twins due to differences in structural complexity require different rating models -in fact each structured product should have its own model- and especially react differently to change in any macroeconomic factor. It is now widely known that deteriorating lending criteria were not accounted for while default correlation where largely underestimated, thus leading to increased overall systemic risk. CDOs exhibit higher sensitivity to credit risk as re-securitization of ABS mezzanine tranches implies lower assets quality, thus even the most senior tranches can be considered unsafe. Furthermore, as the process is repeated, each tranche gets smaller and smaller thus exhibit increased sensitivity to default risk. ADBI research evaluated a base scenario -BS- with alternate views of both higher probabilities of default -4.5% against 3%- and default correlation – 0.5 against 0.1- Comes out the impact of higher default probabilities is the largest for mezzanine ABS, with 28.2% more sensitivity than in BS, which explains the large increase in the value-at-risk 79.7% and expected shortfall 36.7% of senior CDOs. Mezzanine and junior CDOs remain unchanged as they are 100% “at risk” by definition. Higher default correlations lead to a small positive effect for RMBS equity but in generally there is also increase sensitivity for the senior tranches reflected in ES at 36.7%. This shows that senior tranches are more sensitive to change in systemic risk thus explaining the why AAA CDOs’ tranches lost between 4 to 7 notches when downgrades happened back in 2009 (IMF, 2012). Section III. Remedies and conclusion Reestablishing trust about securitization on the long run is essential instead of shying away from the process. On the short run increased product transparency and simpler structures to facilitate risk valuation should be efficient measures from investors’ point of view. The former can be implemented through information collection (assets’ riskiness and performance), avoiding re-securitization and shortening securitization chain (OECD, 2011). On the other hand, limitations can arise, firstly collecting information and produce reliable measurements can be challenging when products are new and secondly in a booming economy, investors’ confidence is high thus incentive towards financial innovation increases and is reflected by more complex products with complex structures (ADBI, 2010). Changes in policies/regulations have been applied for the purpose of long-term horizon, firstly, the 5% minimum risk retention rule in effect since 2011 in Europe has been established, in order to increase originators “skin in the game” to disincentive excess risk taking and enforce due diligence (IMF, 2013). There is a lack of established consensus on which tranches retention scheme is the most effective with regard to equity -most conventional method-, mezzanine or vertical slice retention since it is highly dependent on both tranche thickness and the economic cycle (BIS, 2009). Furthermore, the amount to be retained -despite the rule- varies with each transaction and market segment. If it is too low, screening incentives could be misaligned while high retention will lead to higher securitization costs. To solve both those issues, information disclosure regarding the amount retained at issuance and over the security’s lifetime as well as whether tranche exposure have been hedged allow for flexibility while also helping regulatory bodies to help track changes the market (BIS, 2009). The same year, the ECB increase the haircut applicable to ABS from 12% to 16% however this could revive the use of overcollateralization to reach desired threshold (OECD, 2011). The simplified supervisory formula approach -SSF- suggest that ratings could be generated internally by banks to avoid overreliance on CRAs ratings but conflict of interest between the bank’s role as regulator and profit-seeker could arise (2011). Finally, Basel III stricter capital requirements for securitized products provide additional cushion in case of losses but limit securitization positive spillovers (2013). The policies mentioned above are therefore to be manipulated with careful considerations. An alternative to ABS products is covered bonds securitization, which are very popular in Germany whereby loans are backed by a pool of high-quality assets and if default arise, the loan is replaced with a performing loan though such situation never happened since their creation (Fligstein and al., 2010). In the united states, the bond will require to go through an SVP instead of remaining on the balance sheet and this represent a potential risk it is untested. Appendix 1. Credit Ratings Source: IMF (2013) Bibliography Asian Development Bank Institute, (2010), Securitized products, Financial Regulation and Systemic Risk, [online] Available at: https://asianbondsonline.adb.org/publications/adb/2010/financial_regulation_systemic_risk.pdf [Accessed 27th April 2019] BIS, (2009) quarterly review. The future of securitization: how to align incentives. [online] Available at: https://www.bis.org/publ/qtrpdf/r_qt0909e.pdf [Accessed 27th April 2019] Fligstein, N., and Goldstein, A., (2010), ‘The anatomy of the mortgage securitization’, Emerald Group Publishing Limited, pp.29 – 70, [online] Available at: https://www.emeraldinsight.com/doi/pdfplus/10.1108/S0733-558X(2010)000030A006 [Accessed 27th April 2019] IMF, 2013. Securitisation : lesson learned and the road ahead. [online] Available at: https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Securitization-Lessons-Learned-and-the-Road-Ahead-41153 [Accessed 27th April 2019] OECD journal: financial markets. Outlook for securitization market. Vol 2011, (1). [online] Available at: http://www.oecd.org/finance/financial-markets/48620405.pdf [Accessed 27th April 2019] Bank Risk Management and Collateralized Debt Obligations
Howard University Death Relationship Breakups and Economic Loss Research Paper.

The research assignment is somewhat of a “critique” of your Crisis Intervention topic. The research assignment will require an analysis (opinions, findings, conclusions) from you. Your article should have statistics, percentages, and/or a statement that states, A study was conducted by. Bibliographies, Reference List, Notations…etc are ONLY needed if you are using (quoting) someone else’s work.Please provide me with YOUR thoughts, ideas, recommendations/suggestions on your topic. Do NOT forget to attach the ARTICLE (NOT the website) at the end of your paper. I NEED the ACTUAL ARTICLE.**You may attach the ARTICLE as a PDF file** ONLY the article, your actual paper must be submitted as a WORD document.
Howard University Death Relationship Breakups and Economic Loss Research Paper

The movie Flight is based on a real life story of a United States air crash that took place in 2000. It has been directed by Robert Zemeckis. The starring character is Captain Whip Whitaker a role played by Denzel Washington. In the movie, the pilot is a functional alcoholic who manages to miraculously land a plane that was destined for doom. The cause of the plane crush is said to be either the irresponsibility of the pilot or a technical error. It is for this reason that the N.T.S.B launches an investigation on the condition of the pilot when he was flying the plane. The pilot union representative, Charlie Anderson has full knowledge on the fact that Whip was under the influence of alcohol and cocaine while flying the plane. He however, chooses to make the toxicological report go away and at the same time hires a defense attorney, Hugh Lang who will represent Whip in the N.T.S.B hearing. Charlie together with Hugh take extreme measures in an attempt to ensure Whip does not end up in prison. The endeavors are rendered vain by Whip himself who in the face of impending freedom chooses to own up to his actions and admit his was under the influence of alcohol while flying the plane. This confession earns him jail term which he takes positively. His rehabilitation is evidenced in the fact that he admits to his fellow inmates about not regretting his choice in telling the truth and it is also in jail hat he mends his relationship with his son (Zemeckis, 2012). The main theme in the movie is personal growth. Personal growth is defined as an individual’s ability to demonstrate accountability and responsibility on any actions undertaken. At the same time, the individual should be able to make healthy choices and decisions that contribute to a positive lifestyle. The theme in the movie is further developed not only be the actions of the actors but also through the elements found in the movie. There are two elements in the movie that play a vital role in the development of the theme, these are religion and journey. Throughout the movie, the element of religion is alluded to in a number of ways. Through the use of religious icons like Jesus and Lord, Religious symbols are also evident in physical forms like the church where the plane crushed and the crucifix hung in the co pilot’s hospital room. Finally, there are religious actions like baptism which was disrupted by the plane crush. In the movie, actors that have embraced religion seem to have a positive attitude towards life in that their religion enables them see things clearly and make positive healthy decision. For those characters whose life is in turmoil, religion is seen as the only thing that will help them get out of their miserable life and achieve personal growth (Gross, 2006). Get your 100% original paper on any topic done in as little as 3 hours Learn More The second element that recurs throughout the movie is the journey. The characters that undertaken a journey consciously or unconsciously experiences a change in life. The journey acts like an eye opener where the character is forced to begin a new life. Every individual has a weakness and there are those who have addictions that undermine any efforts to change their lives. However, there is hope for every individual to better their lives by utilizing events and signs that rarely occur in their lives. These events are considered turning points. Basing on the actions that occur in different scenes in the movie, we will establish how these elements contribute to personal growth while at the same time establish the fact that every human being should look forward to rectifying his or her life by holding onto something that is of great significance in life. Towards the end of the movie, in the federal hearing scene chaired by NTSB, Whip who has been priory convinced by Hugh and Charlie to deny the fact that he was under the influence of alcohol on the fateful plane crush day is faced with the choice of telling the truth or lying. Hugh and Charlie expect Whip deny the fact that the two bottles found in the cabin’s trash can had been used by him and he should instead lay the blame on his dead colleague Katerina Marquez. He is asked several questions to which he provides false answers. When he is asked about the alcohol bottles, he hesitates. Whip is addicted to drugs and alcoholic and lying is not a big deal to him, but when the element of religion is introduced in the scene, he finally tells the truth. He says, “God help me”. Then he takes responsibility for his own actions. He shocks the hearing committee together with other members present in the hearing room when he admits his mistakes and even goes ahead to reveal the fact that he was currently under the influence of alcohol (Gross, 2006). It is the first time in the movie where we see Whip acknowledging the existence of God without mocking or questioning his will. He is used to lying and has never felt any need to admit that he is an alcoholic. However, it can be ascertained that he sought the help of God when he finally gave God the respect that is due and allowed himself to accept his help. He for the first time made a conscious decision to face the consequences of his actions. The consequences of his action s were severe but his initial fear of facing them all disappeared. We witness a significant positive growth in the personal character of Whip, he willingly tells the truth not only by owing up to the vodka bottles but also by providing the right answers to the questions asked before. He also admits he has a problem. This is the first step to straightening the life of a crocked individual. He says, “I am drank now, because I am an alcoholic” (Zemeckis, 2012). We will write a custom Essay on “Flight” Film Analysis specifically for you! Get your first paper with 15% OFF Learn More Characters like Margaret and the co-pilot who are believers in Christ seem to lead a more responsible and sober life. They seem to have a hold of their lives and have a desire in them to introduce Whip to the new religion. This is due to the fact that they believe God is the only person that can change him. When whip visits the co pilot in hospital, the co plot tells Whip that the crush was the work of God and was meant to happen. He says, “I prayed for you the night before and the crush was pre ordained”. Religion is seen as a tool through which fate is defined and in this case the defined fate was meant to change the life of Whip and turn him into a responsible human being. It is the events that occur after the crush that push Whip into embracing Christianity and finally finding the need to change his life. This is a remarkable growth in personality. Characters that undertake a journey in the movie are either in a conscious search of a better life or in an unconscious endeavor that leads to a miraculous change of their life. The result of the flight undertaken by Whip is a plane crush. However, the crush opens up his eyes to the realities of life and he begins to see the need for changing his life style. In the scene at the hospital, Whip who has now regained his consciousness turns down Harling May when he offers him a bottle of vodka. He is shaken by the crush to the point where he decides to stay away from alcohol. He tells Harley May “take the vodka with you, am not drinking anymore”. Even though he fails to adhere to his abstinence, the result of his journey has a significant effect on him, a foreshadowing of the big changes he makes later in his life. In the undertaking the journey, the characters are in a search of a better life, a demonstration of a willingness to embrace personal growth by expressing a desire to leave behind a reckless lifestyle. In the scene where Nicole and Whip argue, he later remorsefully reveals to her his fear of the judgment that will be passed on the impending case. He expresses a desire to start a new life away from Georgia. He says to Nicole, “I want to take a journey to Jamaica and there I will visit a clinic in order to seek help with my addiction”. Whip’s action is an act of responsibility and an expression of a lingering desire to not only mend his problems but at the same time start a new life devoid of reckless and irresponsible behaviors. In the same scene where Whip admits to Nicole his fears, Nicole also admits her fear of going back into alcohol and drug addiction it can be argued that her decision to go away in search of a better life is not originally hers but she gets it from the conversation she shares with Whip. She is a recovering drug addict who has a sponsor to see her through her recovery process. She runs away from temptations since she is afraid of going back to the same old irresponsible lifestyle. We notice a Nicole that has a desire to improve the quality of her life by distancing herself from unhealthy activities. We hear her tell Whip, “I m afraid of using again”. This fear cannot be compared to the strong urge that pushed her into injecting herself with strong doses o f heroine that led to her hospitalization (Jackson, 2000). Not sure if you can write a paper on “Flight” Film Analysis by yourself? We can help you for only $16.05 $11/page Learn More In conclusion, the movie utilizes the elements of religion and the journey to develop the theme of personal growth. Each individual has a different life but there will always come a time when life will present an opportunity for growth. It is important for an individual to seize this opportunity since It will enable an individual improve the quality of his life while at the same time develop into a responsible and accountable individual. References Gross, D. (2006, July 11). Film’s untimely flight plan. Philadelphia Daily News, p. 27. Jackson, D. (2000, June 5). Ground flight-film gunplay: Final Edition. Times – Colonist, p. A.6. Zemeckis, R. (2012). Flight. Retrieved from https://www.imdb.com/title/tt1907668/

University of Central Missouri 737 MAX 8 Clashes Angle of Attack Discussion

University of Central Missouri 737 MAX 8 Clashes Angle of Attack Discussion.

I’m working on a policy discussion question and need a sample draft to help me learn.

Discuss in 500 words your opinion on what lessons should be learned from the 737 Max 8 crashes. Use at least three sources. Include at least 3 quotes from your sources enclosing the copied words in quotation marks and cited in-line by reference to your reference list. Example: “words you copied” (citation) These quotes should be one full sentence not altered or paraphrased. Cite your sources using APA format. Use the quotes in your paragraphs. Do Not Doublespace.
University of Central Missouri 737 MAX 8 Clashes Angle of Attack Discussion

Qualitative Research Results Technologies Report

essay writer free Introduction Research studies are important in academic pursuit as they allow students to broaden their knowledge of various disciplines (Gorard, 2013). However, it is important for students to understand various research methods available, and identify which method is best applicable. Research analysis may be qualitative or quantitative in nature. The choice of the research analysis is influenced by several factors. However, students may access different technologies available to facilitate their research study. This paper reviews different technologies available to improve qualitative research results. The paper also highlights the difference between inductive and deductive reasoning in result interpretation. Finally, the research investigates the relationship between communication, remuneration and job satisfaction. Literature Review Employee satisfaction is important for organizational development. This has influenced researchers’ decision to investigate the factors that influence employee satisfaction. Two important factors that may influence employee satisfaction are remuneration and communication (May,

CSU Global Campus Probability Distribution Discussion

CSU Global Campus Probability Distribution Discussion.

Read Example 1 and explain your take away. Add additional information. Your document should include minimum 200 words plus credible references.Example 1:As the manager of an organization, I would first want to clarify whether the data being reviewed was discrete or continuous, as this is an important distinction to make before going any further (Holmes et al., 2017). Since the annual employee turnover involves counting the number of turnovers in a year, the data can be designated as discrete. Also, it is assumed that the probability distribution needed will be one that is forecasting the year ahead, and that the probability for success will change as employees may not be replaced after they have left the company, or the events are dependent. The hypergeometric distribution would be appropriate for this task, as the work population can be divided into two groups, those who leave the company and those remain employed, or a particular location compared to the organization as a whole (Holmes et al., 2017). More than one person may leave the company simultaneously, and the conditions may not be identical in every case (Holmes et al., 2017).The random variable will be equal to the group of interest which is assumed for this example to be those who leave the company of their own accord. The function for the hypergeometric distribution, where (Colorado State University Global, 2020):x = the # of successes (in this case, turnovers)n = # of trials (total work days in one year)f (x) = the probability of x successes in n trialsN = total number of elements in population (all days in a year)r = total # of successes in population (total turnovers among all employees)F(x) = ((r/x) * ((N-r)/(n-x)))/(N/n)Additional data needed would include the total number of working days in one year, the total number of employees, and the number of employees that left due to turnover in the previous year as a reference point.This probability distribution applies due to its discrete variables, dependent events were conditions are not repeatedly identical, sampling without replacement, and the opportunity to make estimations for sample sizes compared to larger populations (Holmes et al., 2017).Colorado State University Global. (2020). Module 4: Discrete and Continuous Probability [Interactive lecture]. Canvas. https://portal.csuglobal.eduHolmes, A., Illowsky, B., Dean, S., & Hadley, K. (2017). Introductory business statistics. Houston, TX: OpenStax. Retrieved from https://openstax.org
CSU Global Campus Probability Distribution Discussion

Macroeconomics Questions

Macroeconomics Questions.

Answer the following questions in 100 words or less1. Just what happens in the economy when we have inflation? How does it impact us? 2. Which of Inflation’s costs is the most important to the US Economy, and why do you think so?3. Who or what group is responsible for monetary policy in the US? Just how independent are they of political pressure, and how are you so sure of that?4. Do you prefer a strong dollar or a weak dollar? Just what does that mean, and why do you prefer one over the other?5. Define net exports and net capital outflow.
Macroeconomics Questions