Calculating losses in tranchesTo the right is a graphic representation of a CDO.Lets say there is a loss of 10% on the underlyingassets, in our case subprime mortgages, how doyou calculate losses in different tranches1. Figure out the losses on underlying assets:in our case 10%2. Allocate loss to original senior tranche:O Senior: 0.80 x 0.10 = 8%3. Allocate losses to mezzanine tranche:OO4. Break down the mezzanine tranche into CDO tranches:The senior CDO tranche: 0.65 x 7% = 4.55OAssetsOSenior Tranche (80%)AAAÖMezzanine Tranche (15%)BBBThe mezzanine tranche has an allocation of 15%, however, since it is subordinate(waterfall payment system), it only absorbs losses after the senior tranche hasabsorbed its 80% share. Calculation: 15% - 8% = 7%20Equity Tranche (5%)Not RatedThe mezzanine tranche: 0.25 x 7% = 1.75The equity tranche: 7% - 4.55% -1.75% = 0.7% (or 0.1 x 7% = 0.7%)The mezzanine tranche isrepackaged with othermezzanine tranchesSenior Tranche (65%)AAAMezzanine Tranche(25%) BBBEquity Tranche (10%)

Figure out the losses on the underlying assets: In this case, it's 10%.Allocate the loss of the…

1. Figure out the losses on underlying assets: in our case 10% 2. Allocate loss to original senior tranche: Senior: 0.80 x 0.10 = 8% 3. Allocate losses to mezzanine tranche: O The mezzanine tranche has an allocation of 15%, however, since it is subordinate (waterfall payment system), it only absorbs losses after the senior tranche has absorbed its 80% share. Calculation: 15% - 8% = 7% 4. Break down the mezzanine tranche into CDO tranches: The senior CDO tranche: 0.65 x 7% = 4.55 The mezzanine tranche: 0.25 x 7% = 1.75 The equity tranche: 7% - 4.55% -1.75% = 0.7% (or 0.1 x 7% = 0.7%) O Equity Tranche (5%) Not Rated O O

1. Figure out the losses on underlying assets: in our case 10% 2. Allocate loss to original senior tranche: Senior: 0.80 x 0.10 = 8% 3. Allocate losses to mezzanine tranche: O The mezzanine tranche has an allocation of 15%, however, since it is subordinate (waterfall payment system), it only absorbs losses after the senior tranche has absorbed its 80% share. Calculation: 15% - 8% = 7% 4. Break down the mezzanine tranche into CDO tranches: The senior CDO tranche: 0.65 x 7% = 4.55 The mezzanine tranche: 0.25 x 7% = 1.75 The equity tranche: 7% - 4.55% -1.75% = 0.7% (or 0.1 x 7% = 0.7%) O Equity Tranche (5%) Not Rated O O

Database System Concepts

7th Edition

ISBN:9780078022159

Author:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan

Publisher:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan

Chapter1: Introduction

Section: Chapter Questions

Problem 1PE

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Fergusonball players are given a star rating based on the number of points that they score and the number of fouls that they commit. Specifically, they are awarded 5 stars for each point scored, and 3 stars are taken away for each foul committed. For every player, the number of points that they score is greater than the number of fouls that they commit. Your job is to determine how many players on a team have a star rating greater than 40. You also need to determine if the team is considered a gold team which means that all the players have a star rating greater than 40. Input Specification The first line of input consists of a positive integer N representing the total number of players on the team. This is followed by a pair of consecutive lines for each player. The first line in a pair is the number of points that the player scored. The second line in a pair is the number of fouls that the player committed. Both the number of points and the number of fouls, are non-negative integers.…
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When you borrow money to buy a house, a car, or for some other purpose, you repay the loan by making periodic payments over a certain period of time. Of course, the lending company will charge interest on the loan. Every periodic payment consists of the interest on the loan and the payment toward the principal amount. To be specific, suppose that you borrow $1,000 at an interest rate of 7.2% per year and the payments are monthly. Suppose that your monthly payment is $25. Now, the interest is 7.2% per year and the payments are monthly, so the interest rate per month is 7.2/12 = 0.6%. The first month’s interest on $1,000 is 1000 X 0.006 = 6. Because the payment is $25 and the interest for the first month is $6, the payment toward the principal amount is 25 - 6 = 19. This means after making the first payment, the loan amount is 1,000 - 19 = 981. For the second payment, the interest is calculated on $981. So the interest for the second month is 981 X 0.006 = 5.886, that is, approximately…
Problem You have a fence post located at the point (x,y) where a goat is tethered by a rope. You also have a house, which is a rectangle with diagonally opposite corners at the points bottom-left: (x1,y1) and top-right: (x2,y2). You want to pick a length of rope that guarantees the goat cannot reach the house. Determine the minimum distance from the fence post to the house, so that you can make sure to use a shorter rope. Recall that the distance formula is: (x2−x1)2+(y2−y1)2 The input consists of a single line containing six space-separated integer values: x, y, x1, y1, x2, and y2. You are guaranteed that x1<x2 and y1<y2, and that (x,y) is strictly outside the axis-aligned rectangle with corners at (x1,y1) and (x2,y2). Return the minimum distance from the goat’s post to the house as a floating-point value from main(). Learning Objectives Be able to create a program with a lesser template. Be able to calculate the min/max of integers. Be able to write a mathematical…
Suppose, you are working in a company ‘X’ where your job is to calculate the profit based on their investment. If the company invests 100,000 USD or less, their profit will be based on 75,000 USD as first 25,000 USD goes to set up the business in the first place. For the first 100,000 USD, the profit margin is low: 4.5%. Therefore, for every 100 dollar they spend, they get a profit of 4.5 dollar. For an investment greater than 100,000 USD, for the first 100,000 USD (actually on 75,000 USD as 25,000 is the setup cost), the profit margin is 4.5% where for the rest, it goes up to 8%. For example, if they invest 250,000 USD, they will get an 8% profit for the 150,000 USD. In addition, from the rest 100,000 USD, 25,000 is the setup cost and there will be a 4.5% profit on the rest 75,000. Investment will always be greater or equal to 25,000 and multiple of 100. Complete the RECURSIVE methods below that take an array of integers (investments) and an iterator (always sets to…
Suppose, you are working in a company ‘X’ where your job is to calculate the profit based on their investment. If the company invests 100,000 USD or less, their profit will be based on 75,000 USD as first 25,000 USD goes to set up the business in the first place. For the first 100,000 USD, the profit margin is low: 4.5%. Therefore, for every 100 dollar they spend, they get a profit of 4.5 dollar. For an investment greater than 100,000 USD, for the first 100,000 USD (actually on 75,000 USD as 25,000 is the setup cost), the profit margin is 4.5% whereas for the rest, it goes up to 8%. For example, if they invest 250,000 USD, they will get an 8% profit for the 150,000 USD. In addition, from the rest 100,000 USD, 25,000 is the setup cost and there will be a 4.5% profit on the rest 75,000. The investment will always be greater or equal to 25,000 and multiple of 100. Complete the RECURSIVE methods below that take an array of integers (investments) and an iterator (always sets to…
The cost of renting a room at a hotel is, say $100.00 per night. For special occasions, such as a wedding or conference, the hotel offers a special discount as follows: If the number of rooms booked is at least 10, the discount is 10%; at least 20, the discount is 20%; and at least 30, the discount is 30%. Also if rooms are booked for at least three days, then there is an additional 5% discount. Write a program that prompts the user to enter the cost of renting one room, the number of rooms booked, the number of days the rooms are booked, and the sales tax (as a percent). The program outputs the cost of renting one room, the discount on each room as a percent, the number of rooms booked, the number of days the rooms are booked, the total cost of the rooms, the sales tax, and the total billing amount. Your program must use appropriate named constants to store special values such as various discounts.
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