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Category - Economics

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The practice of consolidating debts to be traded in financial markets is termed:
  1. Subprime lending
  2. Privatization
  3. Monetization
  4. Securitization
Explanation
Answer: D - Securitization is the practice of bundling individual contractual debts into securities or bonds that can be traded in financial markets. This practice was one of the contributing factors to the financial crises in the United States and European Union in the late 2000s. The complexity of securitization often masks the reliability of each individual component, making it difficult to monitor a security or bond's inherent level of risk.
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