What Is an Appropriate Definition for "Securitization

question 29

Multiple Choice

What is an appropriate definition for "securitization"?

• A) the repackaging of bank assets into readily marketable forms
• B) the promise of a secure return on deposits in FDIC banks
• C) the simplification of interest-bearing assets into their simplest derivative form
• D) the unloading of derivative securities in response to a bank run
• E) the reinforcement of an asset's worth through official certification

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Definitions:

Effective Cost Of Capital

The actual cost of a company's funding after adjusting for various factors, including tax benefits, associated with different sources of capital.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure that reflects the significance of each value.

Specific Costs

Costs that can be directly attributed to a particular project, department, or activity.

Required Return

The minimum return that keeps an investor in a particular stock. Generally a function of the risk perceived in the investment.