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Asset securitization D21

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Asset securitization D21

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • January 19, 2022 at 9:12 am #647008
    humai
    Participant
    • Topics: 741
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    • ☆☆☆☆

    Sir in Dec 21 answer examiner has written that:

    Asset securitisation provides a means to capitalise future income flows into an asset, in this case Co’s rental income, and then use this asset as a means of borrowing funds. Converting the future rental income into an asset would likely be undertaken through SPV. Co would then manage the rent collection and use the rental income stream to pay the interest and capital over a specified time period

    Sir instead of the above para, if I write following para then would it be fine:

    Asset securitisation involve taking future rental income and converting them into assets through SPV. These assets are sold as bonds and future rental income will be used to pay coupon on the bonds. effectively, Co receives money from sale of asset today.

    January 19, 2022 at 3:43 pm #647030
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    Yes, what you have written is fine.

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