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    • Member Info
      • Native Language:
      • Chinese
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      • China
      • Current Location:
      • China

    • Join Date: Oct 2008
    • Posts: 21
    #1

    Smile AAA derivative

    From my point of view, it seemed almost impossible that you can consider a mortgage to someone who had no assets, no income and no job, who had ever been part of a AAA derivative.
    What is AAA derivative? i konw it's a financial term and it may not be proper for me to raise this question here, but do anyone know what it is? i've searched th e internet but found no definite answer.
    thank you for your explanation:)

    • Member Info
      • Native Language:
      • American English
      • Home Country:
      • United States
      • Current Location:
      • United States

    • Join Date: Oct 2008
    • Posts: 907
    #2

    Re: AAA derivative

    Dear Vivianguo:

    from InvestorWords.com - Investing Glossary

    derivative


    Definition
    A financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and quite risky.


    AAA in financial terms usually means 'top quality'.

    So, an AAA derivative is a top quality derivative. From the definition of derivative, you can see that it is still a risky investment.

    I hope this is useful,

    Petra

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