a. Regarding securitized credit instruments, what\'s a trust? Please explain thi
ID: 2732941 • Letter: A
Question
a. Regarding securitized credit instruments, what's a trust? Please explain this term.
b. Should there be more regulation of securitized credit instruments? Why or why not?
c. What is the difference between a T-bill, T-note and T-bond?
d. Smaller companies, when looking to expand (typically from about $1 million to $4 million in revenues) one of the funding sources they consider is bonds. In real life what is the problem with a small company of that nature funding its growth through issuing bonds?
a. Regarding securitized credit instruments, what's a trust? Please explain this term.
b. Should there be more regulation of securitized credit instruments? Why or why not?
c. What is the difference between a T-bill, T-note and T-bond?
d. Smaller companies, when looking to expand (typically from about $1 million to $4 million in revenues) one of the funding sources they consider is bonds. In real life what is the problem with a small company of that nature funding its growth through issuing bonds?
Explanation / Answer
a. Regarding securitized credit instruments, a special purpose vehicle or trust is formed for the specific purpose of funding the assets.Once the assets are transferred to the issuer, there is normally no recourse to the originator. In the case of certain assets, such as credit card debt, where the portfolio is made up of a constantly changing pool of receivables, a trust in favor of the SPV may be declared in place of traditional transfer by assignment.
b. There should be more regulation of securitized credit instruments because of the risk factor involved in the assets and credit instruments.
c.
Treasury bills have maturities of a year or less.
Treasury notes are issued with maturities from two to ten years.
Treasury bonds are long-term investments that have maturities of 10 to 30 years from their issue date.
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