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Mortgage-Backed Securities: CNBC Explains

CNBC Explains
Thursday, 18 Aug 2011 | 11:11 AM ET
Mortgage-Backed Securities: CNBC Explains
Buying a home is usually the biggest individual investment people make in their lifetime. And more often than not, a mortgage is involved. With such large sums of money in the mortgage market, financial firms profit by using a type financial instrument called mortgage-backed securities, or MBSs. How are mortgage-backed securities created and what purpose do they serve? Salman Khan of the Khan Academy gives a basic explanation of MBSs.

Buying a home is usually the biggest individual investment people make in their lifetime and more often than not, a mortgage is involved. With such large sums of money involved in the mortgage market, financial firms profit by using a type financial instrument called mortgage-backed securities, or MBS. How are mortgage-backed securities created and what purpose do they serve? Salman Khan of the Khan Academy gives a basic explanation of MBS.

From this video you’ll understand:

  • How investment banks create mortgage-backed securities
  • The rational behind mortgage-backed securities
  • How investors in mortgage-backed securities are paid

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