Which of the Following Best Describes the Benefits to the Borrower

question 54

Multiple Choice

Which of the following best describes the benefits to the borrower of selling asset backed securities?

• A) Due to the portfolio effect,the borrower can package up low quality accounts receivable and sell them for a premium price.
• B) The borrower trades current cash flows for future cash flows.
• C) The asset-backed security may carry a better credit rating.
• D) The borrower has collateral tied to the asset backed security.

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Definitions:

Securities and Exchange Commission (SEC)

An independent U.S. federal agency responsible for regulating the securities industry, enforcing federal securities laws, and ensuring that markets operate fairly and efficiently.

Independent Agency

is a government body established to regulate and oversee specific areas of public policy, distinct from executive departments.

Judicial Review

The process by which courts examine government actions to determine if they conform to the constitution or other legal standards.

Agency Behavior

Actions and decisions made by agents representing others in business transactions, reflecting the interest of the principal.