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3) Real Estate Finance - Coggle Diagram
3) Real Estate Finance
Investment
Capital Budgeting and Planning
Capital Management and Control
2 major actors in the financial world
household
financial intermidiaries
governement
business
nonresident
examples
banks
obtain funds by
borrowing
use these to aquire assets such as securities or loans
4 aspects banks look at
Liquidity Management
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Asset Management
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Liability Management
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Capital Adequacy Management
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issuing new liabilities
Measuring Bank Performance
Net income (NI) = all income - expenses
Return on assets (ROA) = net income / assets
Return on Equity (ROE) = net income /capital
Net interest margin (NIM) = (interest income - interest expenses) / assets
Hong Kong doesnt have a central banks
Its responsibilities include developing and implementing monetary policy, and maintaining exchange rates and monetary stability
banknotes issued by 5 commercial banks
authorized institutions (AIs) comprise
Licensed Banks (LBs),
Restricted License Banks (RLBs), and
Deposit-taking Companies (DTC)
US does
The Federal Reserve System
to provide the nation with a safer, more flexible, and more stable monetary and financial system.
independent of US polotics
Duties of the Federal Reserve System
conducting monetary policy
supervising and regulating the depository institutions
maintaining the stability of the financial system
providing payment and other financial services to the US government, the public, financial institutions, and foreign official institutions.
There is 12 Federal Reserve Banks
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insurance companies
pension funds
mutual funds
functions
Channel funds from lenders to borrowers
morgages
there are different types of forward morgages
Interest-and-capital repayment loan
Endowment mortgage loan
The low-start loan
The stabilized loan
The select-payment loan
The cap-and-collar loan
The index-linked loan
Two types of rates
fixed
Adjustable rate morgage (ARM)
ARMs allow much better matching of balance sheet assets and liabilities
ARMs reduce the possibility of prepayment and thus the reinvestment risk inherent in that possibility.
Mortgages have ways to be secured
Types of mortgage-backed securities (MBS)
Pass-through securities
Collateralized mortgage obligations (CMOs)
Strips
reasons
Direct lending to house buyers.
Direct lending to housing finance institutions.
Purchasing marketable securities issued by housing finance institutions.
Purchasing loans from housing finance lenders.
Purchasing MBSs from housing finance lenders.
reverse morgage
Create liquidity of money
Provide a Payment System
Provide financial services
Offer portfolio adjustment facilities
Financial Market
Primary
making and selling new products
Secondary
selling already existing products from previous owners to new buyers
