Securitization Refers to the Creation of New Securities by _________

question 52

Multiple Choice

Securitization refers to the creation of new securities by _________.

• A) selling individual cash flows of a security or loan
• B) repackaging individual cash flows of a security or loan into a new payment pattern
• C) taking an illiquid asset and converting it into a marketable security
• D) selling financial services overseas as well as in the U.S.

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Definitions:

Simple Interest

A method of calculating interest where it is applied only to the principal amount, not on the accumulated interest.

Profit

The financial gain obtained when revenue from business activities exceeds the expenses, costs, and taxes involved in operating.

Simple Interest

An interest calculation method where the charge is based on the original principal amount, unaffected by the added interest.

Required Rate

The minimum return an investor expects to achieve by investing in a particular asset, taking into account its risk level.