Question by Scott M: securitisation and derivatives?
What is securitisation and how can it support with or in location of derivatives?

Ideal answer:

Answer by icprofit6000
I truly never know that much about these but located this in the wikipedia

The major use of derivatives is to minimize risk for 1 celebration while offering the possible for a higher return (at improved threat) to one more

Securitization typically applies to assets that are illiquid (i.e. can’t very easily be sold). It is frequent in the real estate industry, exactly where it is applied to pools of leased property, and in the lending market, exactly where it is applied to lenders’ claims on mortgages, house equity loans, student loans and other debts.

All assets can be securitized so long as they are associated with a steady amount of money flow. Investors “acquire” these assets by making loans which are secured against the underlying pool of assets and its associated earnings stream. Securitization thus “converts illiquid assets into liquid assets” by pooling, underwriting and promoting their ownership in the type of asset-backed securities (ABS).

Securitization is the approach of aggregating similar instruments, such as loans or mortgages, into a negotiable security.

Derivatives are monetary instruments whose value is derived from the value of some thing else. They usually take the type of contracts below which the parties agree to payments between them based upon the worth of an underlying asset or other information at a distinct point in time. The principal types of derivatives are futures, forwards, possibilities, and swaps

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