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Derivative does not equal swap. MBS is definitely a derivative. It's a bond whose price and cash flow is based on an underlying pool of loans. The mortgage l
by nissimk 13y ago
Derivative does not equal swap. MBS is definitely a derivative. It's a bond whose price and cash flow is based on an underlying pool of loans. The mortgage loans themselves are not derivatives, but mbs are. Stock options are cash products and they are most certainly derivatives.
- retube 13y agoSorry you are wrong. MBS is not classed as a derivative. As pointed out above it's actually a structured finance product. But anyway as a simple sum of underlying cash products it's still a cash product (you pay upfront cash equal to the notional of the instrument) A stock option on the other hand is most definately NOT a cash product, although the underlying is. The stock itself is not traded , it's just a financial contract whose value is a function of the stock price.