Which of the following is a benefit of securitization through the use of a properly structured SPE to a company?

I. Remove receivables from the balance sheet
II. Remove debt from the balance sheet
III. Lower financing costs
IV. Recognize gains on the sale of assets to the SPE

A)I, II, III, and IV
B)I, II, and III
C)I and IV
D)II and III

Question

Which of the following is a benefit of securitization through the use of a properly structured SPE to a company?

I. Remove receivables from the balance sheet
II. Remove debt from the balance sheet
III. Lower financing costs
IV. Recognize gains on the sale of assets to the SPE

A)I, II, III, and IV
B)I, II, and III
C)I and IV
D)II and III

Quizplus · Accepted Answer

Securitization through a properly structured Special Purpose Entity (SPE) allows a company to remove receivables from the balance sheet, potentially remove debt from the balance sheet, lower financing costs due to the transfer of risk and potentially better credit rating of the SPE, and recognize gains on the sale of assets to the SPE. This process can improve a company's financial ratios and access to financing.

Which of the Following Is a Benefit of Securitization Through