Wasting Asset

Finance Allah Shmoop what is an asset backed security Well

if you haven't seen our M night channel on directed

video on Collateral you should It won the Academy Award

for best finance video frequently confused with a Tom Cruise

action flick Riveting stuff So why would you see this

or other videos while other than to see Cem truly

groundbreaking CG effects like this Because assets backing a security

our collateral that is the asset itself is the guarantee

that bond holders get if the money isn't paid back

or said differently The bonds borrowed against the assets function

as the collateral in the loan funding whatever a B

s security is being offered You have an airplane or

actually one hundred of them together they're worth two billion

box bonds were issued to buy them two billion bucks

worth of bonds BBB The planes are going to be

incorporated into SHMOOP West Airlines flight schedule Only problem Shmoop

West doesn't have the collateral or the cash Ola to

just you know by them But shmoop West Air can

lease them or pay interest on them for the privilege

of using them And that's a good thing because well

eBay airlines just happens to own a bunch of used

airplanes So what happens then Well the owner of the

airplanes pledges them as collateral and raises cash ola money

in the form of bonds by borrowing against the assets

of the airplane The asset of the airplane is the

guarantee that backs the bond Should something up you know

go awry So uh yeah On behalf of everyone here

it's shmoop West Air We'd like to wish you a

safe ish flight Peanuts