SEMESTER SPRING 2022

CREDIT & RISK MANAGEMENT

(FIN625)

Assignment – 2

Total Marks: 10 Due Date: August 30, 2022

Topic: Securitization
ABC bank is a well-established bank. When the banking operations were started by the ABC
bank, the bank provides different types of loans to their customers. However, over time the bank
has begun to involve in different contemporary processes such as securitization. In credit
portfolio management, securitization is a revolutionary concept. It is also one of the methods to
purchase/sale of credit assets or loans. Other methods are syndicated loans and distressed debts.
There are different securitization exposures such as asset-backed securities, mortgage-backed
securities, liquidity facilities, credit enhancement, currency and interest rate swaps.

Required:

1. Explain in detail what are the different steps involved in the process of securitization of
loans. (Marks 2)
2. Different parties are involved in the process of securitization. You are required to enlist
the name of these different parties. Also, explain the role of each party in the
securitization transactions. (Marks 2)
3. What significant advantages the ABC bank can obtain through the securitization of loans?
(Marks 2)
4. Asset-backed securities are one of the main securitization products. Explain how Asset-
backed securities transactions work. (Marks 2)
5. External rating agencies perform different roles. Explain the external rating agencies’ role
in Asset-backed securities deals. (Marks 2)

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IMPORTANT

24 hours extra/grace period after the due date is usually available to overcome
uploading difficulties. This extra time should only be used to meet emergencies, and
above mentioned due dates should always be treated as final to avoid any
inconvenience.

OTHER INSTRUCTIONS
DEADLINE

• Make sure to upload the solution file before the due date on VULMS.

• Any submission made via email after the due date will not be accepted.

FORMATTING GUIDELINES
• Use the font style “Times New Roman” or “Arial” and font size “12”.

• It is advised to compose your document in MS Word format.

• You may also compose your assignment in Open Office format.

• Use black and blue font colors only.

REFERENCING GUIDELINES
• Use APA style for referencing and citation. For guidance, search “APA reference
style” in Google and read various websites containing information for better
understanding or visit:

http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html

RULES FOR MARKING

Please note that your assignment will not be accepted and marked ZERO, if:

• It is submitted after the due date.

• The file you uploaded does not open or is corrupt.

• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF,
etc.

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• It is cheated or copied from other students, the internet, websites, other reading
materials, books, journals, etc.

Note related to load shedding: Please be proactive

Dear Students!

As you know that post-Mid-Term semester activities have been started and the
load shedding problem is also prevailing in our country nowadays. Keeping in view
the fact, you all are advised to post your activities as early as possible without
waiting for the due date. For your convenience, the activity schedule has already
been uploaded on VULMS for the current semester. Therefore no excuse will be
entertained after the due date of assignments, quizzes, or GDBs.