What is the meaning of securitization$,$ and why is it considered a key development in the evolution of 'financial capitalism'?

Group of answer choices

Securitization is the pooling of various types of contractual debt such as residential mortgages, commercial loans, or other receivables and selling their related cash flows to third$-$party investors as securities$.$ This process is pivotal in financial capitalism as it expands the range and volume of investable assets, diversifies risks, and increases the efficiency and liquidity of financial markets.

Securitization involves the process of converting illiquid assets into publicly tradable securities$,$ primarily enabling businesses to enhance their liquidity management by trading these securities on public markets. It is considered a minor development in financial capitalism due to its limited use in modern finance.

Securitization refers to the governmental issuance of securities in order to fund public sector projects, such as infrastructure and social programs. While important, it is not a central aspect of financial capitalism, which focuses more on private sector financial innovation.

The process of securitization involves the creation of complex derivative products that only sophisticated investors use, making it a controversial and often criticized aspect of financial capitalism due to its opacity and the high risks involved.