Securitization benefits financial markets by:
A) increasing the role of intermediaries.
B) establishing a barrier between investors and originating borrowers.
C) allowing investors to tailor credit risk and interest rate risk exposures to meet their individual needs.

Question

Quizplus · Accepted Answer

Securitization allows investors to choose securities with different levels of credit risk and interest rate risk, allowing them to tailor their exposures to their specific needs. This enhances the efficiency of financial markets and can attract a wider range of investors. Option A is incorrect because securitization can actually reduce the need for intermediaries by enabling direct investment in underlying assets. Option B is incorrect because securitization can actually increase transparency between investors and originating borrowers.

Securitization Benefits Financial Markets By