Which of the Following Observations Is NOT Correct

question 79

Multiple Choice

Which of the following observations is NOT correct?

• A)Most loans are sold with recourse.
• B)Loan sales are a primitive substitute for securitization.
• C)Selling of a loan creates a secondary market for loans.
• D)Ownership of the loan is always transferred to the loan purchaser.
• E)Loan sales do not involve the creation of new types of securities.

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Definitions:

Transactions

The activities or dealings that involve the transfer of goods, services, money, or titles between parties, forming the basis of accounting records.

Asset Account

An account that represents a resource owned by a business from which future economic benefits are expected.

Expense Account

An account used to record expenses incurred by a business, which are then used to reduce income on the profit and loss statement.

Understated

Understated means that a financial amount has been reported or recorded as less than its actual or true value.