Many types of debt including auto loans, student loans and credit debt are securitized. The practice of securitization helps provide extra funding to those markets and reduces the risk of lending by pooling the debt. a) true b) false

Many types of debt including auto loans, student loans and credit debt are securitized. The practice of securitization helps provide extra funding to those markets and reduces the risk of lending by pooling the debt. a) true b) false

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 6DQ

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Concept explainers

Swaps

A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other financial instruments is variable based on the interest rate, exchange rate, and commodity price. Swap contracts are transacted in an over-the-counter system. Swap contracts are utilized to hedge risk and mitigate loss.

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a) true

b) false

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