Examlex
Select the most correct statement.
Option
A contract that gives its holder the right to buy or sell an asset at some predetermined price within a specified period of time.
Sweetener
A feature that makes a security more attractive to some investors, thereby inducing them to accept a lower current yield. Convertible features and warrants are examples of sweeteners.
Bankers' Acceptance
A short-term debt instrument issued by a company that is guaranteed by a commercial bank, commonly used in international trade.
Securitization
The process whereby financial instruments that were previously thinly traded are converted to a form that creates greater liquidity. Securitization also applies to the situation where specific assets are pledged as collateral for securities, and hence asset-backed securities are created. One example of the former is junk bonds; an example of the latter is mortgage-backed securities.
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