Securitization of Assets: An Accounting and Finance Case

Abstract

This educational case explores the interesting and complex topic of asset securitization. In the past decade, a large portion of worldwide debt issuances have used this process. Securitization is the transformation of long-term receivables into new debt securities that look entirely different. These securities are sold into the investment markets and traded with liquidity. In this assignment, students model the full set of cash flows in a simulated securitization of equipment loans, and evaluate the underlying accounting and finance issues. An actual securitization is also analyzed to gain a real-world perspective.