there is an example: For example, a firm might sell $100 million of receivables to be collected in the future for $90 million (which represents the present value of the $100 million). The $10 million gain is actually the interest on the transaction. The gain can be affected by a number of estimates including the expected default rate, the expected prepayment rate, and the discount rate. why there is $10 Million gain? Thanks.
it seems like $10 million should be a loss since it’s an interest expense
gain to the party securitizing the recievables. The company selling the same is done by getting their money!! Anish
good point, anish. A loss to one party is a gain to the other party.
I tried =)