Question:

Which of the following best describes the motivation for a corporation to issue securitized bonds? Securitization of specific assets by a corporation enables the corporation to:

A get a credit rating on the bonds that will result in a lower cost of borrowing.

Explaination

Issuing securitized bonds from a special purpose entity allows a corporation to dedicate the assets’ cash flows to specific debt issues. This enables the issue to receive a higher credit rating than that of the corporation.