Which of the Below Statements Is FALSE

question 6

Multiple Choice

Which of the below statements is FALSE?

• A) Securitization is a vehicle for raising funds directly in the public market without the need for a financial intermediary.
• B) Securitization reduces risk via diversification.
• C) The costs of contracting and information processing are provided in asset securitization.
• D) The concerns with the financial disintermediating impact of securitization are that more assets will be held in the portfolio of banks.

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Definitions:

Financial Instruments

Contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Debt Issue Costs

Expenses incurred when a company issues debt, such as bonds, including legal, underwriting, and registration fees.

An Expense

Costs incurred by a business in the process of earning revenue, directly impacting the company's net income.

Amortization Of Discount

The process of gradually recognizing the discount on bonds payable as interest expense over the life of the bond.