Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Securitisation
- This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
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- December 6, 2015 at 5:22 pm #288265
Can you briefly explain in brief about secularisation
Thanks in advance
December 6, 2015 at 5:51 pm #288276You mean securitisation 🙂
It is effectively turning income into capital by (for example) selling shares (and getting the cash therefore) in return for the future income.
For example (and this is actually a good illustration of what securitisation is), the singer David Bowie was earning income from sales of his records and plays on the radio. He securitised it by forming a company and selling the shares. As a result, the shareholders now get the income from his records. He no longer gets it, but instead got a lot of money from the issue of the shares.
He turned his future income into a big capital receipt, by issuing shares that were backed by the income.
December 6, 2015 at 7:18 pm #288298Excellent explanation
Thanks alotDecember 7, 2015 at 7:28 am #288365You are welcome 🙂
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