• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Securitization

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Securitization

  • This topic has 2 replies, 3 voices, and was last updated 7 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • December 3, 2015 at 12:49 pm #287240
    asmaaa
    Member
    • Topics: 4
    • Replies: 3
    • ☆

    Hi john
    Can u explain what securitization is? And how does company uses it?

    December 3, 2015 at 1:48 pm #287261
    umair
    Member
    • Topics: 4
    • Replies: 31
    • ☆

    I dont think company can use it.

    Securitization was used by banks to sell their financial assets (mortgages) and transfer the risk of mortgage default to another person. This allowed banks to raise funds to issue further bonds or mortgages.

    The credit rating on these securitised assets reflected the selling banks rating and not the real risk of mortgage default, and thats what led to the credit crunch.

    Hope that helps.

    December 3, 2015 at 3:46 pm #287300
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    umair:

    Thanks for answering, but please don’t answer in the Ask the Tutor Forum (but please do in the other P4 forum 🙂 ).

    asmaa:

    umair’s answer is correct, except that although it is usually banks it does not have to be.

    For example (and this is actually a good illustration of what securitisation it), 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.

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • tobimillz100 on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • omarcham on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • ANISH1903 on Outsourcing, shared services and disruptive technologies – ACCA Strategic Business Leader (SBL)

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy