Why Is Asset Securitization Is Advantageous to Investors

question 30

Multiple Choice

Why is asset securitization is advantageous to investors?

• A) It removes all risk of holding the assets.
• B) It results in higher returns.
• C) It increases investment choices.
• D) It eliminates the need for financing.

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Definitions:

Alternative Use

The value or potential benefit that is foregone as a result of using an asset or resource in a particular way instead of another possible way.

Sunk Costs

are past expenses that have already been incurred and cannot be recovered or changed, and thus should not affect future business decisions.

Avoidable Costs

Expenses that can be eliminated if a particular decision is made, not incurred in the absence of the decision.

Fixed Costs

Fixed costs are those expenses that do not change in total despite changes in the volume of goods or services produced or sold.