
Ultimate access to all questions.
An investment manager at a large investment bank is developing a new MBS product to offer to the bank's clients. The manager asks an analyst to conduct a thorough analysis of the different types of MBS available in the market and the securitization process used to create these products. Which of the following is correct for the analyst to conclude about securitization after the analysis?
A
Securitization is a practice used exclusively by financial institutions to remove assets from their balance sheets.
B
The securitization process is designed to prevent moral hazard from arising in the loan underwriting process.
C
Securitized products and credit derivatives share the same structure of pooling assets and repackaging them into interest-bearing securities.
D
Securitization increases the liquidity of the market by permitting the distribution of risk among a broad range of market participants.