CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

It is said that securitization "makes non-tradable assets tradable." This is because securitization ______.

A. lowers risk
B. adds liquidity
C. spreads the ownership of risk
Correct Answer: B

Securitization increases liquidity in a variety of previously illiquid financial products. For example, a group of consumer loans can be transformed into a publicly-traded debt security. A security is tradable, and is therefore more liquid than the underlying loan or receivables.

User Contributed Comments 1

User Comment
warnggg Tradable —> liquidity
You need to log in first to add your comment.