Securitization Refers to

question 43

Multiple Choice

Securitization refers to

• A)changing the mix in a financial portfolio away from stocks and toward bonds.
• B)selling directly to investors loans or securities that were formerly held by financial intermediaries.
• C)banks insisting that collateral be supplied on previously unsecured loans.
• D)reducing the exposure of a bank's portfolio to interest rate risk.

Assess the impact of variances on performance evaluation systems.

Understand the treatment of year-end balances in variance accounts.

Recognize the role of engineers and other professionals in setting standard costs.

Analyze the impact of labor rates and efficiency on production cost variances.

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Definitions:

Issuance Price

The price at which securities, such as stocks or bonds, are sold to the public or investors when they are first offered.

Market Rate

Market rate, or market interest rate, refers to the prevailing rate of interest that borrowers and lenders can expect to transact at, in the wider market.

Effective-interest Amortization

A method of calculating the amortized cost of a bond or loan by applying the effective interest rate to the outstanding balance.

Interest Payment

The payment made to a lender by a borrower in return for the use of borrowed money, typically represent a fixed percentage of the principal.