Mr Cooper Group Inc (COOP)

[Johnnyiwantsome]

Embedded Derivatives

Hey Lodas I was just putting it out their again as I did back in January for those whom are still arguing about it. Remember this stock has also As "Az has said a embedded derivative function" as that lets them manipulate the F out of it

Let us learn Embedded Derivatives with an example:

Let’s say there is an entity, XYZ Ltd., which issues bonds in the market. However, the payment of coupon and principal component of the bond is indexed with the price of Gold. In such a scenario the payment of coupon will increase or decrease in direct correlation with the price of gold in the market. In this example the bond issued by XYZ

In this example the bond issued by XYZ ltd. is the debt instrument (Non-derivative), while the payments are linked with another instrument which in this case is gold (Derivative component). This derivative component is known as embedded derivative.

Embedded derivatives are used in many types of contracts. The most frequent use of the embedded derivative has been seen in leases and insurance contracts. It has also been seen that preferred stocks and convertible bonds also host embedded derivatives.


Minipulation and control Regards,
B

P.S, like the videos of your work a lot !