Which of the following are the reasons for raising funds via securitization? (A) To raise capital using non-conventional sources (B) To accelerate earnings for financial reporting purposes (C) To diversify funding resources (D) The potential for reducing funding cost Choose the most appropriate answer from the options given below:

Which of the following are the reasons for raising funds via securitization? (A) To raise capital using non-conventional sources (B) To accelerate earnings for financial reporting purposes (C) To diversify funding resources (D) The potential for reducing funding cost Choose the most appropriate answer from the options given below: Correct Answer (B), (C), (D) only

The correct answer is (B), (C), (D) only

Key Points Securitisation:

• The process of securitisation involves pooling specific asset categories, so they can be repackaged into interest-bearing securities.
• The purchasers of the securities receive interest and principal payments from the assets.

Important Points Securitisation appeals to both state and local governments in addition to non-financial and financial corporations.

The reasons for corporations using securitisation are as follows:

• Ability to reduce financing costs
• Ability to diversify funding sources
• Ability to manage corporate risk
• Capital requirements for financial institutions that must meet risk-based capital requirements can be a possible relief.