- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 17. Fixed-Income Securitization
- Subject 2. The Securitization Process
CFA Practice Question
In the securitization process, the SPV ______.
II. issues asset-backed securities to investors
III. services the loans
I. originates the loans
II. issues asset-backed securities to investors
III. services the loans
Correct Answer: II only
The SPV buys the loans from the seller and issues the asset-backed securities.
User Contributed Comments 4
| User | Comment |
|---|---|
| aap2406 | Can SPV also act as a servicer ? |
| Inaganti6 | That's the job of the borrower I think |
| Inaganti6 | Actually no SERVICED is the SPV services job is to pay up |
| Kiniry | The servicer is usually the originator. Think of your mortgage as an example: You continue to make all payments to your bank, it doesn't matter if they've repackaged your loan into a MBS, and you probably wouldn't know even if they did. By collecting payments from you, your bank is acting as the servicer of the loan. |