Securitization

question 35

Multiple Choice

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 a bond issuer to repay a 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.

---

Definitions:

Bracket Creep

A phenomenon where inflation pushes income into higher tax brackets, increasing taxation without an actual increase in real purchasing power.

Tax Liabilities

Tax liabilities are the amounts of money that individuals, companies, and other entities are legally obligated to pay to local, state, or federal tax agencies.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Real Rate of Return

The annual percentage growth rate of an investment adjusted for inflation, providing a more accurate measure of the investment's profitability.