This episode introduces structured products, explaining their creation from existing assets to meet specific investor needs regarding risk, tax, and liquidity. It covers various types, including equity-linked products, and the wrappers used to legally present them, detailing their potential tax effects. We discuss mortgage-backed securities (MBS), including residential (RMBS) and commercial (CMBS), along with the critical aspect of prepayment risk. We then examine more complex structured products like collateralized mortgage obligations (CMOs) and collateralized debt obligations (CDOs), outlining their tranching and risk distribution, and relating mezzanine tranches to option collars and spreads. Finally, we addresses valuation techniques, the use of payoff diagrams, investor motivations for using these products, and the recent availability of liquid structured products in ETF form.
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This podcast is an independent production and is not affiliated with or endorsed by any third-party entities unless explicitly stated. The content is for educational and informational purposes only and does not constitute financial, investment, legal, or professional advice. Listeners should consult qualified professionals before making any decisions based on this content.
This episode is based on a chapter from my book, Alternative Investments: Expanding Frontiers (soon to be released on LeanPub.com), and was generated using Notebook LM and other AI tools. While I have reviewed the content for accuracy, it may still contain errors, inaccuracies, or omissions. Neither the producers nor any affiliates accept liability for any damages or losses arising from the use or interpretation of this content.
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