CMA Final · Strategic Financial Management · Securitization
A housing finance company, Kaveri Housing Finance Ltd, transfers a pool of home loans to a special purpose vehicle (SPV) that issues pass-through certificates to investors. In this structure, the company that originally granted the loans and sold them to the SPV is called the:
The company that grants the loans and transfers them to the SPV is the originator. The servicer only collects instalments, the obligor is the borrower who owes the money, and the trustee safeguards investors, so originator is the correct term.
- AOriginatorCorrect
- BServicer
- CObligor
- DTrustee
Explanation
In securitization the entity that originally creates the receivables and sells them to the SPV is the originator. The servicer collects payments, the obligor is the borrower, and the trustee protects investors' interests. Here Kaveri Housing Finance is the originator.
Did you get it right without looking?
One question tells you little. A timed set on Securitization shows your real accuracy, how long you take and where you lose marks.
More Securitization questions
- A pool of loans has a principal of Rs 10 crore, to be repaid in equal annual instalments over 3 years at 10% p.a. (annuity factor for 3 year…
- Under the Indian securitization market framework, the practice of an originator purchasing back some assets from the SPV when the outstandin…
- A pool of auto loans of ₹100 crore is securitised by an NBFC through an SPV. Pool collections are expected to cover the investors' dues, and…
- In a securitisation transaction in India, a bank sells a pool of auto loans to a special purpose vehicle (SPV), which issues pass-through ce…
- A loan pool of Rs 50 crore carries a weighted average interest of 11% p.a. The SPV pays PTC investors 9% p.a. on Rs 50 crore, and servicing …
- An SPV acquires a pool of auto loans with an outstanding principal of Rs 50 crore and issues pass-through certificates. The pool's loans car…