Securitization:
A) turns many loans into a single, larger asset.
B) is an agreement in which a lender gives money to a borrower in exchange for a promise to repay the amount loaned plus an agreed-upon amount of interest.
C) is a promise by a bond issuer to repay a loan at a specified maturity date and to pay periodic interest at a specific percentage rate.
D) turns many loans into a risk-free, secure asset.

Question

Quizplus · Accepted Answer

Securitization turns many loans into a single, larger asset by pooling individual loans and selling them to investors in the form of securities. This reduces risk for the lender by spreading it across multiple loans, and creates a more diverse investment opportunity for investors.