1. Freddie Mac is not a bank, but a real estate loan company. Its real estate loans were purchased from the American banking system. It packages long-term real estate mortgages into mbs bonds and sells them to buyers. There is a difference between mbs bonds and real estate mortgage loans purchased from banks. Of course, loan interest is greater than mbs bonds, which is the main source of profit for Freddie Mac. If the mortgage is repaid in advance, there is no interest on the mortgage loan. However, because mbs bonds are long-term bonds and cannot be recovered (unless the holders exchange them), Freddie Mac has to use its own funds to pay interest to mbs bondholders until the bonds expire. This will cause huge losses to Freddie Mac, not just interest.
For example, Freddie Mac purchased a loan of US$ 654.38+million from a bank with an interest rate of 654.38+00% and a term of 654.38+00 years. After making mbs bonds, the interest rate is 9% and the term is 10 year. The income of Freddie Mac is 1%. Because the mortgage is repaid in advance, Freddie Mac has to pay at least 9% interest for 10.
2. The issuance of 2.mbs bonds should be supervised by financial institutions of the US government. If you don't issue it yourself, there will be no such bonds in the market, so you can't buy them or raise money.
3. Dynamic hedging is to prevent the stock portfolio from falling below the preset minimum. If the value of the portfolio rises and exceeds the preset minimum value, the hedging will be reduced, so that the portfolio can get more market returns. If the value of the portfolio declines, hedging will increase.
Incomplete dynamic hedging only pays attention to the violent interest rate fluctuations that may occur in the short term, but ignores the violent interest rate fluctuations that do not occur frequently in the long term.
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