Which of the Following Statements About Securitisation Is Incorrect? Securitisation

question 34

Multiple Choice

Which of the following statements about securitisation is incorrect? Securitisation:

• A)capitalises the future cash flows arising from illiquid assets.
• B)does not have any inherent problems to make it problematic.
• C)is an illegitimate business practice for raising finance.
• D)may also be used to assist in managing risk.

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Definitions:

Winding Up

The process of dissolving a company, involving liquidating assets to pay off creditors and distributing any remaining assets to shareholders.

Capital Account Balance

The net result of public and private international investments flowing in and out of a country, reflecting changes in ownership of national assets.

Net Income

The amount of profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue.

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use.