wanganjie

 

The correct answer is C

All of the participants are typically included in a securitization except the regulatory body. The regulator will be involved if the circumstances of the deal warrant oversight.

wanganjie

 

8、Which of the following statements most accurately describes the effect of selling a loan without recourse? The:

A) bank that sells the loan retains a contingent liability.

B) loan is removed from the balance sheet of the bank that sells the loan.

C) bank that sells the loan bears a specified percentage of the credit risk.

D) purchaser has the right to sell the loan back to the bank that originated the loan.

wanganjie

 

The correct answer is B

When a bank originates a loan and then sells it without recourse, the loan is removed from the bank's balance sheet, and the purchaser bears all of the credit risk.

wanganjie

 

5、Securitization of trade receivables transfers which risk(s)?

A) Market risk. 

B) Credit and market risk. 

C) Credit risk. 

D) Credit, market, and operational risk. 

wanganjie

 

The correct answer is C

By monetizing the asset, the originator has transferred the credit risk to the SPE.

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6、The key to whether a separate relationship exists between loan originators and special purpose entities (SPEs) in a securitization is whether:

A) a “separate corporation” of the entities has occurred.

B) a “complete sever” of the relationship between the entities has occurred.

C) an “approved sale” of the assets has occurred.

D) a “true sale” of the assets has occurred.

wanganjie

 

The correct answer is D

The assets have to transfer from the loan originators to the SPEs through a "true sale" for a securitization to have transferred real ownership of the assets.

wanganjie

 

3、Which of the following are possible assets for securitization?

      I. Aircraft leases.

     II. Tobacco legal settlements.

    III. Equipment used for making glass bottles.

    IV. Trade receivables.

A) I only.

B) II and III.

C) III and IV.

D) I, II, and IV.

wanganjie

 

The correct answer is D

Any asset that either generates or has the potential to generate cash flows is a possible candidate for securitization. Aircraft leases and trade accounts receivables both generate cash flows, while tobacco legal settlements have the potential to. Equipment by itself does not directly generate cash flows; however, note that a lease on such equipment would be a candidate for securitization.

wanganjie

 

4、Which of the following are often cited as motivations for originators to participate in the securitization marketplace?

      I. Cash is readily accessible.

     II. The amount of required regulatory capital decreases.

    III. Liability risk can be swapped for asset risk.

    IV. Assets and liabilities are better matched.

A) I only.

B) I, II, and IV.

C) I and III.

D) II and IV.