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Open yourself to future credit possibilities

24 Feb

What happens when you open yourself up to future possibilities? This is what the concept of future orientation decision making is all about. Here we explore the ability to recognize—even welcome—the potential, the unexpected, the new. Whether an organization is closed or open to new information is determined by whether it has a past or future orientation.With a past orientation, we communicate and make decisions on the basis of past information and reject or ignore new information. Traits of a past orientation include: Reliance on past history for decision making, Language focused on past events or behavior, Independent relationships, Strong need for control, Need to maintain the status quo, Low trust, Win-lose conflict resolution style.

Those with a past orientation operate in a closed paradigm—they view the world the way they want it to be. They’re unwilling to challenge their own assumptions and change their beliefs. They make decisions based on outdated mental maps. They are speaking and living in the past with old information.

 

The basic credit strucure

21 Nov

The idea in a CDO transaction is to securitize debt collateral to make it more attractive to different classes of investors. In the earlier days, CDOs purchased high yield/emerging market debt through a special purpose vehicle (SPV) and raised funds by issuing securities ranging from AAA to BB/B. The overall risk of the portfolio of various collateral is tranched from relatively safe to speculative to satisfy different degrees of risk appetite.

Beginning with the most senior class, the cash flows from the collateral are used to service the outstanding notes sequentially. Losses are allocated on the basis of reverse seniority. This basic structure is also known as a cash flow CDO because the collateral cash flows are used to sevice the outstanding securities. Every CDO has an asset side, generating its revenue, and a liability side, whose obligations need to be satisfied. The difference between them is termed the funding gap.

 
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Posted in business tips, cash reserves, credit, credit cards

 
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