International Business

ch9

Student: ___________________________________________________________________________

1. When a bank sets aside a group of income-earning assets and then sells securities based upon those assets, it is ________________________ those assets.

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2. Often when loans are securitized, they are passed on to a(n) ________________ which pools the loans and sells securities.

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3. A(n) _________________________ allows homeowners to borrow against the residual value of their residence.

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4. _________________________ allow the banks to generate fee income after they have sold a loan. The bank continues to collect interest and principal from the borrowers and passes these collections to the loan buyers.

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5. In a(n) _________________________ an outsider purchases part of a loan from the selling financial institution. Generally the purchaser has no influence over the terms of the loan contract.

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6. A(n) _________________________ is a contingent claim of the firm that issues it. The issuing firm, in return for a fee, guarantees the repayment of a loan received by its customer or the fulfillment of a contract made by its customer to a third party.

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7. A(n) _________________________ occurs when two banks agree to exchange a portion or all of the loan repayments of their customers.

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8. A(n) __________________ guards against the losses in the value of a credit asset. It would pay off if the asset declines significantly in value or if it completely turns bad.

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9. A(n) _________________________ combines a normal debt instrument with a credit option. It allows the issuer of the debt instrument to lower...