18
QuizMultiple Choice

Asset-backed Securities, Loan Sales, and Derivatives — Test

Question 18 • (AG Q4) Financial Literacy: 25-26 (JRush)

A bank is preparing a financial asset for trading in the over-the-counter market. It most nearly sounds as though they are _____.

Answer
A
collateralizing a loan
B
creating a derivative
C
offsetting negative risk
D
securitizing

Explanation

Securitizing means packaging a financial asset—such as loans—into securities that can be traded. Preparing an asset for trading in the over-the-counter market most closely describes that process. Collateralizing a loan instead means pledging an asset to secure borrowing.

AI-written and checked against the verified answer.

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