Question
The financial practice of pooling contractual debt such
as residential mortgages or auto loans and selling their related cash flows to third party investors is called?Solution
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs).
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