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You can think of it as a 3 state Markov Chain: when a loan is made it is considered GOOD. As long as it is good, the bank automatically accrues earnings on this loan. When the bank notices that a payment from the customer has been missed for a certain time (usually 90 days) the loan becomes NPL or non performing loan; the bank stops recognizing income on ...


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MBS are securities which represent ownership in a pool of mortgages ABS are securities which represent ownership in a pool of assets other than mortgages (for example auto loans or credit card loans) Collateralized Debt Obligation are complex entities which issue tranches of securities to investors and use the proceeds to buy MBS, ABS or other assets. The ...


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As a saver you are happy to receive interest but as a borrower the tables are turned and you have to pay interest on the outstanding balance. It is a different perspective that you may not thought about before. Basically you should try to reduce the interest you are paying to the minimum necessary. For example to buy a house you may need to get a mortgage,...


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debt/loan lifecycle could be described as: 1) origination 2) debt is outstanding; borrower makes regular interest payments and prepays (scheduled or unscheduled) if any. debt/loan is considered performing 2.1) if borrower misses interest payment, debt/loan becomes delinquent, grace period starts 2.2) grace period expires, still no payment - debt becomes ...


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Net Debt = Total Debt - Cash You can also see from the graph, that Net Debt is always below Total Debt. Cash (and liquid marketable securities) is deducted from Debt, because it could be in theory directly used to repay the debt, hence only "Net Debt" is important; think a company with 1mio Debt and 1mio Cash, one would not say it was in debt because it ...


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Equity is for the bulls; debt is for the bears. It depends on what kind of capital is available for financing and what the group needing capital can offer in terms of security. Early stage startups have nothing to offer but future returns (especially if they are cash-flow negative). A high risk investment with little collateral and a high burn rate may not ...



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