Whois & Analysis for globalcapital.com

Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs).

Investors are repaid from the principal and interest cash flows collected from the underlying debt and redistributed through the capital structure of the new financing.

Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).

A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company's cash flow is the collateral used to secure and repay the borrowed money.

The use of debt, which has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition.

This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.

The renminbi (lit. "people's currency"; sign: 元, ¥; ISO 4217: CNY) is the official currency of the People's Republic of China.

The yuan is the basic unit of the renminbi, but is also used to refer to the Chinese currency generally, especially in international contexts.

The distinction between the terms renminbi and yuan is similar to that between sterling and pound, which respectively refer to the British currency and its primary unit.

One yuan is subdivided into 10 jiao, and a jiao in turn is subdivided into 10 fen.

In finance, a derivative is a contract that derives its value from the performance of an underlying entity.

This underlying entity can be an asset, index, or interest rate, and is often simply called the "underlying".

Derivatives can be used for a number of purposes, including insuring against price movements (hedging), increasing exposure to price movements for speculation or getting access to otherwise hard-to-trade assets or markets.

A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold.

Capital markets are defined as markets in which money is provided for periods longer than a year.

Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments.