The process of packaging tiny investments into a larger portfolio and selling a security backed by the portfolio's cash flows is called _____.

Question

Quizplus · Accepted Answer

Packaging tiny investments into a larger portfolio and selling a security backed by the portfolio's cash flows is called securitization. This process is commonly used to pool loans such as mortgages, credit card debt, and car loans, and then sell them to investors as bonds or other types of securities, thereby spreading the risk among a larger group of investors.

The Process of Packaging Tiny Investments into a Larger Portfolio