Fixed Income-II

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Fixed Income-II

Postby bhuyanpk » Mon Sep 28, 2015 1:56 am

Pls can you explain with example what is Overcollaterization

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Re: Fixed Income-II

Postby edupristine » Mon Sep 28, 2015 8:10 am

When the asset is kept as collateral(security) to the investor whose value is more than the debt(loan) taken. This concept is over-collateralization.
For Eg: I have taken loan for $1 million from investor and kept my home which is for $1.2 million as collateral. So, $0.2 million is the over-collateralization.

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