The Main Problem with Securitization Is That

question 49

Multiple Choice

The main problem with securitization is that

• A) governments are no longer able to repackage bank assets.
• B) securitized banks grow too large and create oligopolies.
• C) There is no problem. Governments can still get an accurate picture of global financial flows by simply examining bank balance sheets.
• D) governments are not able to monitor bank assets or to asses a bank's risk to the soundness of the international banking system.
• E) the bank assets are not marketable.

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash and securities, owned by a business or individual, used for creating wealth or to engage in further production.

Revenue

The total amount of money earned by a business from its normal business operations, before any expenses are subtracted.

Credit Balance

An accounting situation where the sum of credits in an account exceeds the sum of debits, often seen in liability and revenue accounts.

Income Summary

An account used in the closing process that aggregates all revenues and expenses to determine the overall profit or loss.