Packaging of loans into large pools and issuing securities to investors is called:

Question

Quizplus · Accepted Answer

Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans, or credit card debt obligations and selling their related cash flows to third-party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations. This process diversifies the risk associated with the pooled loans, making it more attractive to investors.

Packaging of Loans into Large Pools and Issuing Securities to Investors