Wall street oasis 1

Mortgage Backed Security
– a security that pays its holder a periodic payment based on cash flows from the underlying mortgages that fund the security
– allowed the investment community to lend money to homeowners with banks acting as the middlemen
Collateralized Debt Obligation
– refers to the broad asset class in which a variety of interest-paying assets are securitized and sold in the form of bonds
– a type of security that pools together a number of interest paying assets, and pays “coupon payments” based on those assets’ future cash flows
Credit Default Swap
– a type of security that pools together a number of interest paying assets, and pays “coupon payments” based on those assets’ future cash flows
– sold in an unregulated market
– used for hedging
Investors are predicting high future earnings from untapped source of revenue from users.
Reason for high valuation of tech companies like FaceBook, Instagram and Twitter
Enterprise value
– the value of an entire firm, both debt and equity
– This is the price that would be paid for a company in the event of an acquisition
Valuation
the procedure of calculating the worth of an asset, security, company, etc
CAPM
Used to calculate the required/expected return on equity (ROE), or the cost of equity of a company
beta
Represents relative volatility or risk of a given investment with respect to the market