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 Net Asset Value (NAV)?5 Views
finance a la shmoop what is net asset value or nav nav is how mutual fund
shares are valued or priced at the end of each trading day take a look at this
mutual fund right here it has fourteen hundred seventy shares of Google and [mutual funds document]
three hundred shares of Amazon and five hundred shares of IBM and while you get
the idea at the end of each day the ask prices in
the bid-ask spread ie the ask is the price at which somebody will sell these
shares are added up and yep totaled in this case there are a hundred fourteen
different names in the portfolio and seven million bucks in cash all of which
total eighty-two point three million dollars in value at the end of this day
well there are two million shares outstanding exactly at this moment so
the nav at today's close well it's eighty two point three million divided
by two million shares outstanding to get forty one dollars fifteen cents per
share that 4115 is the nav of the mutual fund and what happens when more
investors join by you know putting in cash well like let's say somebody
invests a million dollars at the end of today well then the fund goes from [money lining up in rows]
having seven million bucks in cash to having eight million bucks in cash and
that investor just bought 1 million / 4115 4 nav share self that mutual fund
company printed out of thin air an incremental twenty four thousand
three hundred one shares bringing its total the two million twenty four
thousand three hundred one the total value of the fund is now eighty three
point three million bucks up from yesterday's eighty two point three
million and the shares outstanding in the fund are now two million twenty four
thousand three hundred one and yeah the nav didn't change just the shares
outstanding and it's nav not not pronounced nav although it'd be kind of
a cool name for a mutual fund anything never like find where you're going nav [tiny red car on map]
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