Due to the ________, quality of the collateral, and credit enhancement, a corporation can raise funds via a ________ where some of the bond classes have a credit rating better than the corporation seeking to raise funds and where in the aggregate the funding cost is less than issuing corporate bonds.

Question

Quizplus · Accepted Answer

The use of an SPV (special purpose vehicle) and securitization allows a corporation to pool together assets (collateral) that are of high quality and use them to issue bonds with different credit ratings (credit enhancement). This allows for a lower overall funding cost compared to issuing corporate bonds. OTC (over-the-counter) and mobilization are not directly related to securitization and SPV, and therefore are not the best choices.

Due to the ________, Quality of the Collateral, and Credit