I'm curious, what exactly is the purpose of securitization in the world of finance? It seems to be a popular term, but I'm not entirely clear on how it benefits investors, lenders, or the broader financial system. Can you elaborate on the key objectives and advantages of securitization, and how it fits into the overall financial landscape?
5 answers
KpopHarmony
Mon Sep 02 2024
As a result, securitization can lead to lower-cost financing for the originating companies. This is because investors are willing to accept a lower rate of return in exchange for the reduced risk associated with the securitized assets.
Nicola
Mon Sep 02 2024
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Mon Sep 02 2024
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Maria
Mon Sep 02 2024
Securitization is a financial technique that allows assets to be separated from the risk of bankruptcy faced by their originators. By doing so, these assets become more attractive to investors and can be used to raise funds in the market.
CryptoWizardry
Mon Sep 02 2024
One of the key benefits of securitization is that it enables originating companies to access higher credit ratings. This is because the risk associated with the assets has been isolated from the originator's overall financial position.