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In Securitisation when no assets are acquired and the collateral is fixed for the life of the asset, the type of structure is called as

In Securitisation when no assets are acquired and the collateral is fixed for the life of the asset, the type of structure is called as Correct Answer Self-liquidating strucutre

The correct answer is Self-liquidating structure

Key Points Securitisation:

  • Securitisation is the process of pooling and repackaging of homogenous illiquid financial assets into marketable securities that can be sold to investors.
  • The process leads to the creation of financial instruments that represent an ownership interest in, or are secured by a segregated income producing asset or pool of assets. The pool of assets collateralises securities.
  • These assets are generally secured by personal or real property (e.g. automobiles, real estate, or equipment loans), but in some cases are unsecured (e.g. credit card debt, consumer loans).

Important Points Self liquidating Structure:

  • In securitisation, when an asset is not acquired and the collateral is fixed for the entire duration of the asset, such a structure is called a self-liquidating structure.
  • It is a short-term loan, which is repaid with the money generated by the property to be used to buy it.
  • These loans are intended to finance purchases that will generate cash quickly and reliably.

Additional Information Revolving structure: It means an issuing entity that is set up to issue multiple series, classes, subclasses, or tranches of asset-backed securities on multiple issuance dates, all of which are collateralised by a common pool of securitized assets that will change in composition over time and do not monetize excess interest and fees from those assets.

Amortized structure: Amortizing securities are debt-backed, which means they are made up of a loan or a group of loans that have been securitized. Nothing has changed from the initial loan agreement in terms of the borrower's perspective, but the payments paid to the bank flow through to the investor who holds the security generated by the loan.

Collateralised structure: Any secured loan is referred to as "collateralised." To put it another way, the lender has some type of security. If the loan is not returned, the debt is secured by a specified asset possessed by the debtor. Real estate, which is represented by a mortgage, could be used as collateral.

Related Questions

Consider the following pairings of Non-Performing Assets (NPA) classification in India with their descriptions: 1. Substandard assets : Assets which have remained NPAs for a period less than or equal to 12 months. 2. Doubtful assets : Assets which have remained in the substandard category for a period of 12 months. 3. Loss assets : Assets which are considered uncollectible and of such little value that their continuance as a bankable asset is not warranted, although there may be some salvage or recovery value. Which out of the above pairings are correct?
Consider the following statements.
1. In case of standard assets, provision for NPA must be 25% for all types of standard assets.
2. In case of sub-standard assets, provision for NPA must be 10% for all types of standard assets.
3. In case of doubtful assets, 100% provision is required for unsecured and secured advances.
4. In case of loss assets, 10% of unsecured and 100% of secured advance must be kept as provision for NPAs.
Which of the statement(s) given above is/are correct?
The question below consists of a set of labelled sentences. These sentences, when properly sequenced form a coherent paragraph. Select the most logical order of sentences from among the options. P - A Non-performing asset (NPA) is defined as a credit facility in respect of which the interest and/or installment of Bond finance principal has remained ‘past due’ for a specified period of time.  Q - Once the borrower has failed to make interest or principal payments for 90 days the loan is considered to be a non-performing asset.  R - 'Non Performing Assets' have been in the news recently. S - It must be noted, Non-performing assets are problematic for financial institutions since they depend on interest payments for income.
In the following passage, some of the words have been left out. Read the passage carefully and select the correct answer for the given blank out of the fouralternatives.
______________________ the Troubled Asset Relief Program (TARP), the government had purchased assets of struggling banks with a view _______________ ensuringthat they did not collapse taking ____________________ them the rest of the financial system. These assets __________________ later at a profit by the government! TheU.S. government had acted smartly, while in the Indian case the banks now find themselves ______________________ with loans made by them to an individual withnegative net worth.
______________________ the Troubled Asset Relief Program (TARP)
In the following passage, some of the words have been left out. Read the passage carefully and select the correct answer for the given blank out of the four alternatives.
______________________ the Troubled Asset Relief Program (TARP), the government had purchased assets of struggling banks with a view _______________ ensuring that they did not collapse taking ____________________ them the rest of the financial system. These assets __________________ later at a profit by the government! The U.S. government had acted smartly, while in the Indian case the banks now find themselves ______________________ with loans made by them to an individual with negative net worth. (TARP), the government had purchased assets of struggling banks with a view _______________
In the following passage, some of the words have been left out. Read the passage carefully and select the correct answer for the given blank out of the four alternatives.
______________________ the Troubled Asset Relief Program (TARP), the government had purchased assets of struggling banks with a view _______________ ensuring that they did not collapse taking ____________________ them the rest of the financial system. These assets __________________ later at a profit by the government! The U.S. government had acted smartly, while in the Indian case the banks now find themselves ______________________ with loans made by them to an individual with negative net worth. These assets __________________ later at a profit by the government!
P wants to sell his bungalow based in Lutyens, Delhi. Q and S wants to purchase it. The price of the bungalow is 50% and 100% more than the Q’s assets and S’s assets respectively. If Q and S decides to combine their assets in order to acquire this bungalow, then the price of bungalow would be approximately what percentage of these assets?
Mittal wants to sell his steel plant based in Mumbai. Both JSW and TATA wants to purchase it because of the other benefits associated with it. The price of Mittal steel plant is 50% more than the JSW’s assets, and 100% more than TATA’s assets. If JSW and TATA decides to merge and combine their assets in order to acquire this plant, then the price of Mittal would be approximately what percentage of these assets?
Which statement is true?
1. Liquidation value is the value of the assets if they had to be sold under pressure.
2. Earnings valuations entail multiplying the earnings of the venture by a price earnings ratio or dividing the earnings by some capitalisation factor.
3. The book-value of an asset is the historical cost of the asset less accumulated depreciation.
4. Control issues are negotiable and not solely dependent on the proportion of stock the investors have purchased. All minority stockholders have rights.
5. Social trends refer to the modes and manners in which people life their lives. Lifestyles reflect people's tastes and preferences in an economic sense.
In which of the following ways section 73 differs from the corresponding section 295 of the Code of Civil Procedure, 1882?
1. The words, 'where assets are held by a court,' have been substituted for words, 'whenever assets are realised by sale or otherwise in execution of a degree.'
2. The words, 'before the receipt of such assets,' have been substituted for the words, 'prior to the realisation'
3. The words, 'by which such assets are held' are omitted after the words 'made application to the court'
4. The word, 'passed' has been added after the word, 'money'
5. The words, 'interest in,' in cl. (b) have been substituted for the words, 'right against' to bring the wording of that clause into line with the Transfer of Property Act, 1882. This is a mere verbal alteration