Securitization refers to the process of creating a new financial security, such as a bond, by pooling together and selling otherwise separate loan agreements, such as mortgages or car loans. This allows investors to invest in a diversified pool of loans, which can reduce risk and increase liquidity in the financial markets.

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Securitization Is

Question 113

Multiple Choice

Securitization is:

A) the process of balancing your investment portfolio with stocks and bonds.
B) the buying and selling of Treasury securities.
C) the creation of a new security by combining otherwise separate loan agreements.
D) the creation of a tax-free retirement account.
E) the process of selling mortgages at an interest rate below market value.

Correct Answer: