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Fixeed income wrt Asset backed securites

CFA Level I

One of the primary benefits of securitization is that it: A) improves the collectability of the loans that are securitized. Incorrect Answer B) improves the legal claims of the security holders to the loans that are securitized. Correct Answer C) removes problem assets from the issuing firm’s balance sheet. correct ans is option b pls explain why not option c???

Dhakshana Dhakshana

CFA L1

★ 18K+

12-Sep-24 11:54

220

Answers (3)

This is CFA material or kaplan? C appears more appropriate on first glance

Sriram Somayajula

Admin

12-Sep-24 12:01

Sriram Somayajula Admin

This is CFA material or kaplan? C appears more appropriate on first glance

It's kaplan sir probank questions reading 65(Fixed income securtization)

Thread Starter

Dhakshana Dhakshana

CFA L1

★ 18K+

12-Sep-24 12:02

Thread Starter

Dhakshana Dhakshana

It's kaplan sir probank questions reading 65(Fixed income securtization)

Because assets get added back due to consolidation Option c is not correct Option B is correct because SPE has specific recourse over loans once assets are securitized. If not, the investors will not have specific title but have general paripassu cover over all assets of the bank

Sriram Somayajula

Admin

12-Sep-24 13:10

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