When a Subsidiary Obtains Funding Through a _____ It Allows

question 53

Short Answer

When a subsidiary obtains funding through a _____ it allows both the subsidiary and the parent eliminate paying transaction costs to an outside entity such as a bank, which would charge fees to make the transaction.

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Definitions:

Securitized

Refers to the process of pooling various types of debt—including mortgages, car loans, or credit card debt—and selling them as consolidated financial instruments to investors.

GAAP

Generally Accepted Accounting Principles, which are a set of rules and guidelines used to prepare and present financial statements in the U.S.

Collateralized Borrowing

A method of borrowing where the borrower pledges an asset as security or collateral for the loan, which the lender can claim if the loan is not repaid.

Trouble Debt Restructuring

A process whereby terms of a debt are modified due to the financial difficulties of the borrower, typically resulting in reduced interest rates or extended payment schedules.