Securitization:
A) turns many loans into a single larger asset.
B) is an agreement in which a lender gives money to a borrower in exchange for a promise to repay the amount loaned plus an agreed-upon amount of interest.
C) is a promise by the bond issuer to repay the loan, at a specified maturity date, and to pay periodic interest at a specific percentage rate.
D) turns many loans into a risk-free secure asset.

Question

Quizplus · Accepted Answer

Securitization is a process that involves bundling individual loans or assets, such as mortgages or car loans, into a single security or investment product. This turns multiple, individual loans into a larger, single asset. This process allows financial institutions to sell off loans to investors, freeing up capital to make more loans.