Securitization Is the Process of

question 34

Multiple Choice

Securitization is the process of

• A) issuing stocks to finance capital spending.
• B) issuing bonds to finance purchases of equipment and structures.
• C) reducing risk by decreasing corporate debt loads.
• D) converting loans into securities.

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Definitions:

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project, considering the time value of money.

Operating Cash Inflows

Cash received by a company from its operational activities, such as sales revenue minus the operating expenses.

Working Capital Investment

Funds invested in the short-term assets of a company, such as inventory and receivables, to support its day-to-day operations.

Profitability Index

A financial tool used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.