\u3010\u4e60\u9898\u3011 Reading 54.pdf - Securitization is beneficial for banks because it A repackages bank loans into simpler structures B increases the funds

u3010u4e60u9898u3011 Reading 54.pdf - Securitization is...

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【单选题】Securitization is beneficial for banks because it:Arepackages bank loans into simpler structures.Bincreases the funds available for banks to lend.Callows banks to maintain ownership of their securitized assets.解析:B is correct. Securitization increases the funds available for banks to lend because it allows banks to remove loans from their balance sheets and issue bonds that are backed by those loans. Securitization repackages relatively simple debt obligations, such as bank loans, into more complex, not simpler, structures. Securitization involves transferring ownership of assets from the original owner—in this case, the banks—into a special legal entity. As a result, banks do not maintain ownership of the securitized assets.正确答案:B【单选题】Securitization benefits financial markets by:Aincreasing the role of intermediaries.Bestablishing a barrier between investors and originating borrowers.Callowing investors to tailor credit risk and interest rate risk exposures to meet their individual needs.解析:C is correct. By removing the wall between ultimate investors and originating borrowers, investors can achieve better legal claims on the underlying mortgages and portfolios of receivables. This transparency allows investors to tailor interest rate risk and credit risk to their specific needs.正确答案:C【单选题】A benefit of securitization is the:Areduction in disintermediation.Bsimplification of debt obligations.Ccreation of tradable securities with greater liquidity than the original loans.解析:C is correct. Securitization allows for the creation of tradable securities with greater liquidity than the original loans on a bank’s balance sheet. Securitization results in lessening the roles of intermediaries, which increases disintermediation. Securitization is a process in which relatively
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simple debt obligations, such as loans, are repackaged into more complex structures.正确答案:C【单选题】In a securitization, the special purpose entity (SPE) is responsible for the:Aissuance of the asset-backed securities.Bcollection of payments from the borrowers.Crecovery of underlying assets from delinquent borrowers.解析:A is correct. In a securitization, the special purpose entity (SPE) is the special legal entity responsible for the issuance of the asset-backed securities. The servicer, not the SPE, is responsible for both the collection of payments from the borrowers and the recovery of underlying assets if the borrowers default on their loans.正确答案:A【单选题】In a securitization, time tranching provides investors with the ability to choose between:Aextension and contraction risks.
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  • Fall '17
  • CFA
  • Structured finance, Collateralized debt obligation, Mortgage-backed security

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