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\"Mortgage Securitization\" Please respond to the following: Critics have suggested that the complexity inherent in securitization can...

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Finance

\"Mortgage Securitization\" Please respond to the following:Critics have suggested that the complexity inherent insecuritization can limit investors' ability to monitor risk.Evaluate the merits of this criticism, indicating your agreement ordisagreement with the criticism. Provide support for your position.Mortgage-backed securities are believed to have contributed to therecent subprime mortgage crisis. Assess the fairness of thisstatement, providing a rationale for your reasoning and arecommendation for future use of this type of investment.

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4.2 Ratings (726 Votes)
Securitization is a way in which assets are pooled and sold to investors who get paid from the cash flows of the pooled assets The pooled investment has various tranches and the investor can decide which tranche to purchase depending on hisher risk appetite and return expectations Each tranche has a separate credit    See Answer
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