Unit 2 Assignment You are a finance employee at a financial institution, specializing in originating auto loans in a country where auto loans have only been available for 2 years. Your group has just...

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Unit 2 Assignment You are a finance employee at a financial institution, specializing in originating auto loans in a country where auto loans have only been available for 2 years. Your group has just been informed that a close competitor has securitized $150 million in auto loans through an investment bank. • Your boss wants to understand why the competitor did this. Explain. • He also wants to understand the potential benefits for the following: o The issuer o The investors buying the ABS o The individual borrowers seeking auto loans • He also wants to know the likely impact to the auto loan market in this country if a large, liquid ABS market emerges over the next few years.
Answered Same DayJun 18, 2021

Answer To: Unit 2 Assignment You are a finance employee at a financial institution, specializing in originating...

Moumita answered on Jun 22 2021
131 Votes
Abstract
    Securitisation gives the sector of loan a completely new dimension. The process is much more secured and
risk and investment in the company can be much more delivered. There is less pressure on debts management and gives many opportunities for liquidity. In this case, we discuss the ABS system in the auto loan industry, the benefits and the future effects of the system.
Appeal of Securitisation
    The process of securitisation helps in minimising the risk of the loans. It can be said that the market of loans is always subjected to risk and the rescuing of the concept with help of securitisation makes the money invested in the loan scheme can be transferred and exposed to the wider capital market system (Sperling, & Webber, 2017). In the capital market structure, the securitisation gives the wider opportunity to the institutional investors and investment opportunities are open in the market. The diversified system also helps in getting better assessment and management of the risks and the returns in the duration profiles. The repackaging of the non-liquid assets and the loans into a new form of the financial instrument helps in...
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