Which of the following scenarios is an example of securitization?
A)A bank issues more common shares to the public.
B)A multinational manufacturing company sells fixed income securities to a European pension fund in a private deal.
C)A bank creates fixed income securities using the receivables from mortgages on residential property, and sells them to a fixed income mutual fund.
D)The Government of Canada sells 25-year Treasury bonds to raise funds for infrastructure.

Question

Quizplus · Accepted Answer

Securitization refers to the process of pooling assets, such as mortgages, car loans or credit card debt, and transforming them into marketable securities. Choice C describes this process, where a bank creates fixed income securities using the receivables from mortgages on residential property and sells them to a mutual fund. The other choices do not involve securitization.

Which of the Following Scenarios Is an Example of Securitization