Question by Son of a B1tch: Some questions regarding basic terminology in finance?
1) Credit
2) Credit expansion
3) “Pooling” as in pooling debt.
4) Securitization
What do these mean?
Best answer:
Answer by Sean Roberts
1) Credit is providing someone with goods or services with the understanding that they will pay you in a preagreed time in the future.
2) Credit expansion is an economic term. It means the part of any increase in the money supply which is not due to a balance-of-payments surplus. The money supply can increase through a balance-of-payments surplus, on either current or capital account.
3) Debt pooling is an arrangement by which a debtor would deposit funds for the purpose of distributing such funds among his creditors. It is used in bankrupcy.
4) Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said debt as bonds, pass-through securities, or Collateralized mortgage obligation (CMOs), to various investors. This is one of the things that led to the horrible recession we’ve gone through.
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