A corporation needing financing engages an insurance company to place its credit behind the corporation's credit for a fee,which is an example of ________.

Question

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The scenario described is an example of credit enhancement, which is the process by which a third party (in this case, an insurance company) provides a guarantee or support for the creditworthiness of a borrower (in this case, the corporation). The insurance company's credit backing can help the corporation secure financing on more favorable terms, and the insurance company earns a fee for providing this service. Bundling refers to grouping together multiple financial products or instruments to create a new investment opportunity, securitization involves pooling together and repackaging assets (such as loans) to create securities for investment, and unbundling refers to breaking apart a bundled product or service into its individual components. None of these concepts fit the scenario described in the question as well as credit enhancement.

A Corporation Needing Financing Engages an Insurance Company to Place