If a bank securitizes some loans and both the SPV and the ABS investors are depositors...
If a bank securitizes some loans and both the SPV and the ABS investors are depositors in that bank, the originator's deposits at the central bank ___________________.
A. increase
B. first decrease and then increase
C. are not affected
D. first increase and then decrease
Homework Answers
SPV is a special purpose vehicle and ABS is asset backed securities which are bonds or notes backed by financial assets. SPV are financial institutions which buy these notes.
Now, in this case, bank has securitised some loans, money is added to bank. As SPV and ABS investors are depositors in that bank then again bank will get more money through them too. Hence banks deposits with central bank will increase.
option A.
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If a bank securitizes
some loans and both the SPV and the ABS investors are depositors...
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