Could you please provide an illustrative example of a securitized debt? I'm interested in understanding how this financial instrument works in practice. Specifically, I'm wondering if there's a real-world scenario where a company or institution has bundled together loans, mortgages, or other forms of debt, and then sold shares or units of that debt to investors in the form of a security. If so, could you elaborate on the specifics of that example? I'd appreciate your insights on this topic.
5 answers
Ilaria
Tue Sep 03 2024
Securitization is a financial process where a pool of assets is transformed into a security that can be traded on the market. An example of this is when a credit card company groups together thousands of its customers' credit card balances.
AndrewMiller
Tue Sep 03 2024
These balances serve as the underlying assets for the securitization process. By pooling these assets, the credit card company is able to create a more liquid and divisible investment product.
SsangyongSpiritedStrength
Tue Sep 03 2024
Once the pool of assets is formed, the credit card company sells this pool to a financial institution, such as an investment bank. The investment bank then evaluates the pool of assets and determines their value.
CoinMaster
Tue Sep 03 2024
Based on this evaluation, the investment bank issues securities that represent ownership of the pool of assets. These securities can then be traded on the market by investors.
Tommaso
Mon Sep 02 2024
BTCC, a top cryptocurrency exchange, offers a range of services that cater to the needs of investors in the cryptocurrency market. Among these services are spot trading, futures trading, and cryptocurrency wallet services.