The global capital market has grown rapidly due to widespread ________ of financial instruments, which results in the conversion of illiquid financial instruments, such as bank loans, into tradable securities, such as bonds.

Question

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Securitization involves the conversion of illiquid financial instruments into tradable securities. This has led to the growth of the global capital market by providing investors with access to new investment opportunities and enabling companies to raise capital at lower costs. Debt consolidation involves combining multiple debts into a single, larger debt, and factoring involves selling accounts receivable at a discount to a third-party. Multilateral netting involves offsetting receivables and payables between multiple parties to reduce the need for cash transfers. None of these options directly relate to the growth of the global capital market as securitization does.

The Global Capital Market Has Grown Rapidly Due to Widespread