5: How STL Should Be Used In Practice By Investors, Regulators And Rating Agencies
STL is an easy to understand, easy to calculate, powerful risk measurement tool.
In this chapter we will re-introduce STL in another intuitive way, and show how it differs from other more common references to leverage for structured credit products.
We will give a number of examples of how to calculate STL across different asset types – including automobile loans, credit cards and home equity loans – and it will become clearer why certain structures blew up first and why some have not blown up at all.
We will also introduce yet another way to think about STL, which will explain why even banks who hedged themselves found they accrued large ...
With Safari, you learn the way you learn best. Get unlimited access to videos, live online training,
learning paths, books, interactive tutorials, and more.