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    1.After 2005, Securitization was a huge cost to banks and offered very little benefit. This is why the Federal Government had to promote securitization.

    True or false? Why?

    2. Securitization is effective at enabling financial institutions to diversify risk.

    True or false? Why?

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    Solution Preview

    1 - FALSE

    Actually, the 1st part of it is true but the Fed never had to promote securitization. It was a huge cost to banks because people started to go into default by the thousands. It was a huge cost to banks because of the last recession. Investors stayed far away (and still do) from ...

    Solution Summary

    This solution explains if the securitization questions listed (2) are true or false, and explains why the answer is T/F.