1. Which of the following does NOT contribute to the fact that the yields on loan sales are higher than on commercial paper issues for similar maturity and issue size? a) Commercial paper issuers generally are blue chip corporations that have the best credit ratings, while loan sold by the banks are in general of less creditworthy borrowers b) Information, monitoring, and credit assessment costs are lower for commercial paper issues than for loan sales, because commercial paper issuers tend to be well-known companies. c) There is an active secondary market in commercial paper, but not for loan sales. d) The issuance of commercial paper does not require collateral, while collateral is required for loans sold by banks. e) None of the above,
2. Loan assignments make up more than 90 percent of the U.S. domestic loan sale market because a) they have lower capital requirements than other types of loan sales. b) they are riskier than are other types of loan sales. c) monitoring costs are reduced since all rights are transferred upon sale. d) regulators prefer these transactions to loan participations. e) there is no secondary market in loan participations.
3. Which of the following does NOT contribute to the fact (before the financial crisis) that SIV is a more lucrative model than SPV in generat? a) Unlike SPV, SIV investors have no direct rights to the cash flows on the underlying loans in the portfolio b) SIV's ABCP obligations carry interest obligations that are independent of the cash flows from the underlying loan/asset portfolio, while SPV pays out what it receives from the underlying loans in the pool of assets backing the ABS. c) Whereas a SPV earns only the fee for the creation of the asset-backed securities, the SI earns an expected spread between highyielding assets and low: cost commercial paper. d) SIV invests in assets that are designed to generate higher returns than the SIV's cost of fund. e) If the assets in the underlying pool does not generate sufficient cash flows, the SIV is still obligated to make interest and principle payments on its debt instruments