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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.
explanation
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.
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