Asset-Backed Security - ABS
If Kim Kardashian and Nicki Minaj worked as bouncers. Also, a term designating a particular type of debt instruments.
Debt instruments are just ways that companies borrow money without going to a bank. Basically, the company issues bonds or notes that are purchased by investors and can then trade on exchanges in a similar fashion to stocks. Unlike stocks, however, people holding a company's notes don't have any stake in the firm. They are lenders, getting their return on interest rates charged on the debt.
Many times, these notes are unsecured, meaning that they are basically just I.O.U.s - a promise to pay back the money, but with no direct recourse for noteholders if the securities go into default. Sometimes, though, the company provides a little more assurance by backing the securities with some assets.
Typically, the assets involved are financial in nature, things like credit card or car loan receipts. One unusual real-life example: there was a type of note popularly called "Bowie Bonds," which were backed by royalties from David Bowie's music. What could be safer than securities backed by musical tales of androgynous aliens from Mars?
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Finance: What is a Money Market Fund?80 Views
finance a la shmoop. what is a money market fund? isn't it a strange concept
to think about going to a market to buy money? [man walks through grocery store]
well yeah it's strange but the practice exists and it's a huge multi trillion
dollar market today. the key word here is money and not investment. why such a big
diff? well because the notion of investing implies duration. that is when
you invest in a nice fixer-upper home or a tractor distribution company or shares
in a fat dividend-paying bank you're investing for presumably a long time [people stand in line]
like years maybe decades maybe centuries if you can find the right miracle pill.
but here we're talking about money like the stuff you can buy candy with. so it's
short term not long and a money market fund basically comprises many series of
pretty safe bonds that are all coming due in the next 30 to 90 days. sometimes [pie chart]
longer than that sometimes shorter but generally in the very near future. so why
would you care about a money market fund? well because it pays you slightly more
interest on your money than say a bank checking account. and lots of people in
corporations need cash just sitting around to pay their bills, so there are
tons of money market funds out there available and that's the gist of a money
market fund. we're sure you'll have plenty of experience with them by the
time you hit your sixth hundredth birthday day [people cheer and hold birthday cake]
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