Which one of the following provides the best example of securitisation?
A)convertible bond
B)call option
C)mortgage pass-through security
D)preferred share

Question

Quizplus · Accepted Answer

Securitisation refers to the process of bundling together a group of assets and converting them into a new security that can be sold to investors. A mortgage pass-through security is a type of securitisation where a pool of mortgage loans is packaged and sold to investors as securities. The investors then receive a share of the cash flows generated by the underlying mortgage loans over time. This is the best example of securitisation among the given options. Convertible bonds, call options, and preferred shares are not securitisation instruments.

Which One of the Following Provides the Best Example of Securitisation