PT Ch25

PT Ch25 - Exam Name MULTIPLE CHOICE Choose the one...

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The underlying principle of ________ is that a large number of borrowers in a pool will reduce the ________ via diversification. 1) A) asset simplification; diversified risk B) asset secularization; spread risk C) asset socialization; market risk D) asset securitization; credit risk 2) The key benefit of securitization to financial markets is that it ________. 2) A) does not allow for the creation of tradable securities with better liquidity for financial claims that would otherwise have remained in the portfolio of financial intermediaries and therefore highly illiquid. B) allows for the creation of tradable securities with better liquidity for market claims that would otherwise have remained out of the portfolio of financial intermediaries and therefore highly illiquid. C) allows for the creation of tradable securities with better illiquidity for financial claims that would otherwise have remained in the portfolio of financial intermediaries and therefore highly liquid. D) allows for the creation of tradable securities with better liquidity for financial claims that would otherwise have remained in the portfolio of financial intermediaries and therefore highly illiquid. 3) Securitization is a vehicle for raising funds directly in the public market without the need for a financial ________. That is, securitization is said to result in ________. 3) A) go - between; financial interpretation B) intermediary; financial disintermediation C) advisor; accounting disintermediation D) liaison; accounting discrimination 4) In addition to the administration of the loan portfolio, the ________ is responsible for distributing the proceeds collected from the borrowers to the different bond classes in the structure according to the cash flow waterfall. 4) A) bond insurer B) servicer C) trustee D) All of these 5) ________ are loans in which the borrower's periodic payment consists of scheduled principal and interest payments over the life of the loan. 5) A) Amortizing liabilities B) Nonamortizing assets C) Amortizing assets D) Nonamortizing liabilities 1
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6) Which of the below statements is FALSE? 6) A) Securitizations of assets/receivables to arise in the future are referred to as future flow securitizations. B) Commercial loans/receivables that have been securitized include trade receivables, equipment leases, operating assets, franchise loans, small business loans, and whole businesses. C) Consumer loans/receivables that have been securitized include auto loans and leases, credit card receivables, student loans, and home improvement loans. D) The types of real estate
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PT Ch25 - Exam Name MULTIPLE CHOICE Choose the one...

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