Grow More Ltd. an NBFC is in the need of funds and hence it sold its receivables to MAC Financial Corporation (MFC) for 100 million. MFC created a…
CA Final · Advanced Financial Management · RTP · May 2024
Grow More Ltd. an NBFC is in the need of funds and hence it sold its receivables to MAC Financial Corporation (MFC) for 100 million. MFC created a trust for this purpose called General Investment Trust (GIT) through which it issued securities carrying a different level of risk and return to the investors. Further, this structure also permits the GIT to reinvest surplus funds for short term as per their requirement. MFC also appointed a third party, Safeguard Pvt. Ltd. (SPL) to collect the payment due from obligor(s) and passes it to GIT. It will also follow up with defaulting obligor and if required initiate appropriate legal action against them. Based on above scenario, answer the following questions:
Suggested Answer and Working Notes:
Correct Answer: Option (B)
(B) Pay Through Security (PTS)
Topics: Security Valuation, Securitization
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