When a Finance Company Pools Mortgages with Similar Characteristics and Securitizes

question 53

True/False

When a finance company pools mortgages with similar characteristics and securitizes the pool, the loans are removed from the balance sheet of the finance company.

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Definitions:

Cost

The value or price paid to acquire, produce, or maintain a good or service.

Time Value

The time value of money concept suggests that money available now is more valuable than the same amount in the future due to its potential earning capacity.

Cash Sales

Transactions where goods or services are paid for with cash or its equivalent at the time of sale, without delay.

Credit Sales

Sales made by a business where the payment is received after the service or product has been delivered.