In simple terms, the securitization process is:
A)a way to sell structured investment vehicles (SIVs).
B)a way for mortgage lenders to sell accounts receivable to public investors.
C)a way to create high-yield investments with little risk.
D)All of the above
E)a and c only

Question

Quizplus · Accepted Answer

The securitization process primarily involves mortgage lenders (or other types of loan originators) selling their accounts receivable, or in other words, their rights to future cash flows from loans, to public investors. This process turns illiquid assets (like individual mortgages) into liquid securities that can be sold on the open market, thereby providing the original lenders with immediate capital to fund new loans. Choices A and C describe potential outcomes or aspects of securitized products but do not accurately define the securitization process itself.

In Simple Terms, the Securitization Process Is