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Tag Archive: Cost of equity


All valuation classes teach the equity market correlation method so it would be interesting to hear your views. Equity exists in many forms. In imagessecuritization, equity is the tranche that takes the first loss and controls the deal. In a mutual insurer/bank/thrift, etc., the book equity is held by the dividend-receiving policyholders. The real equity is held by management, who actually control the place, because the dividend-receiving policyholders will not vote them out. In a credit tenant lease, there is the guy that owns the property, and typically he puts up a teensy amount of equity, because there is a “credit tenant,” one that has an investment grade rating, and the mortgage is secured by:

  • the property
  • the senior unsecured credit of the “credit tenant,” whose lease payments pay the mortgage, and go directly to the lender, and
  • the equity owner.  Continue reading
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Asset Pricing

Lets revisit an article I published a couple of months back  as we know all valuation classes teach the equity market correlation method soimages it would be interesting to hear your views.

Equity exists in many forms. In securitization, equity is the tranche that takes the first loss and controls the deal. In a mutual insurer/bank/thrift, etc., the book equity is held by the dividend-receiving policyholders. The real equity is held by management, who actually control the place, because the dividend-receiving policyholders will not vote them out. In a credit tenant lease, there is the guy that owns the property, and typically he puts up a teensy amount of equity, because there is a “credit tenant,” one that has an investment grade rating, and the mortgage is secured by:

the property
the senior unsecured credit of the “credit tenant,” whose lease payments pay the mortgage, and go directly to the lender, and
the equity owner. Continue reading

Theory of Asset Pricing

All valuation classes teach the equity market correlation method so it would be interesting to hear your views.images

Equity exists in many forms. In securitization, equity is the tranche that takes the first loss and controls the deal. In a mutual insurer/bank/thrift, etc., the book equity is held by the dividend-receiving policyholders. The real equity is held by management, who actually control the place, because the dividend-receiving policyholders will not vote them out. In a credit tenant lease, there is the guy that owns the property, and typically he puts up a teensy amount of equity, because there is a “credit tenant,” one that has an investment grade rating, and the mortgage is secured by: Continue reading

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