Wasting Asset

  

Categories: Accounting

It was supposed to be this awesome dial-up modem factory. Remember the beep and whistle and then robottty sounding noises as dial-ups tried to find servers at the phone company in the heyday of AOL? There was this huge factory built to pump out 64k dial up modems. And then the world went cable modem with speeds 100x so that teenage boys (and their dads) could very quickly download, um, art films to their computers. That dial-up modem factor cost $100 million, but now it's just a wasting asset, not getting any better with time.

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Finance: What is an Asset Backed Securit...7 Views

00:00

Finance Allah Shmoop what is an asset backed security Well

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if you haven't seen our M night channel on directed

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video on Collateral you should It won the Academy Award

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for best finance video frequently confused with a Tom Cruise

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action flick Riveting stuff So why would you see this

00:21

or other videos while other than to see Cem truly

00:24

groundbreaking CG effects like this Because assets backing a security

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our collateral that is the asset itself is the guarantee

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that bond holders get if the money isn't paid back

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or said differently The bonds borrowed against the assets function

00:38

as the collateral in the loan funding whatever a B

00:41

s security is being offered You have an airplane or

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actually one hundred of them together they're worth two billion

00:50

box bonds were issued to buy them two billion bucks

00:53

worth of bonds BBB The planes are going to be

00:55

incorporated into SHMOOP West Airlines flight schedule Only problem Shmoop

01:00

West doesn't have the collateral or the cash Ola to

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just you know by them But shmoop West Air can

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lease them or pay interest on them for the privilege

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of using them And that's a good thing because well

01:11

eBay airlines just happens to own a bunch of used

01:14

airplanes So what happens then Well the owner of the

01:16

airplanes pledges them as collateral and raises cash ola money

01:21

in the form of bonds by borrowing against the assets

01:25

of the airplane The asset of the airplane is the

01:27

guarantee that backs the bond Should something up you know

01:30

go awry So uh yeah On behalf of everyone here

01:34

it's shmoop West Air We'd like to wish you a

01:36

safe ish flight Peanuts

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