FINANCIAL SYSTEM THEORY Mar., 30th, 2011. Topics for Today Preface Types of Assets. Types of Financial Assets. What is Securitization? What is Mortgage?

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Presentation transcript:

FINANCIAL SYSTEM THEORY Mar., 30th, 2011

Topics for Today Preface Types of Assets. Types of Financial Assets. What is Securitization? What is Mortgage?

Types of Assets Tangible Assets ( 有形資産 ) –Value is based on physical properties –Examples include buildings, land, machines Intangible Assets ( 無形資産 ) –Can’t be touched assets –Examples include copyrights, patents

Types of Financial Assets Bank loans Government bonds Corporate bonds Municipal bonds Foreign bond Common stock Preferred stock Foreign stock

Key Points You Should Understand Difference between tangible and financial assets Difference between debt and equity Cash flow of a financial asset Three types of risks associated with financial asset Two principal economic functions of financial assets

What is Securitization? One of Financial Instrument ( 金融手法 ) Financial Innovation ( 金融革新 ) The process of transforming otherwise illiquid financial assets into marketable capital market securities.

What is Mortgage? A lien on a property (house) Mortgage from the viewpoint of Lender side *transfer risk for others *profits from fee business

Primary Mortgage Market Money Borrower Commercial Bank Borrower

Secondary Mortgage Market Mortgages Investor Commercial Bank Investor