CFA Level I · CFA Level I Exam · Asset-Backed Security (ABS) Instrument and Market Features
In a securitization, the entity that sells the pool of receivables to the special purpose entity in exchange for cash is most likely the:
The originator, also called the seller or depositor, sells the receivables to the special purpose entity and receives the cash raised from ABS investors. The trustee protects investors and the servicer collects payments, so neither is the party that transfers the assets in exchange for cash.
- Atrustee
- Bservicer
- Coriginator or sellerCorrect
Explanation
The seller (originator) owns the loans or receivables and transfers them to the SPE, receiving cash raised from issuing the ABS. The trustee safeguards the interests of investors, and the servicer collects payments on the pool. Neither of these sells the assets.
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