The principal and interest What is the true definition of Compound interest? Main part amount you are borrowing

At the same time, the securities pay a bit more interest than other safe assets, such as Treasury bonds.

Indicate the benefits of Securitization:

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  The benefits of securitization: it reduces risk and increases liquidity for banks, and it raises the supply of loans.
  

How are Subprime lenders defined?

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  Banks lend to millions of firms and individuals. Yet not everyone can borrow from a bank.
  
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  Banks ration credit: they deny loans to people whose default risk appears high. This group includes people with low incomes or poor credit histories.
  
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  Government regulators don’t want banks to make risky loans that could lead to large losses.
  
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  One reason is that the government insures bank deposits, so it stands to lose money if a bank fails.
  
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  People who can’t borrow from banks often turn to subprime lenders, companies that specialize in high-risk loans
  

How Subprime lenders cope with default risk?

What is Adjustable-Rate Mortgages?

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  Adjustable-Rate Mortgages - mortgage loans on which the interest rate changes when a market interest rate (usually the Treasury bill rate) changes.
  

Select the incorrect statement about financial derivatives:

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  Financial Derivatives - Given the greater demand for the reduction of interest-rate risk, develop a product that would help investors and financial institutions protect themselves from, or hedge, interest-rate risk, then they could make profits by selling this new instrument.
  
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  Futures contracts, in which the seller agrees to provide a certain standardized commodity to the buyer on a specific future date at an agreed-on price.
  
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  Financial derivatives - their payoffs are linked to (i.e., derived from) previously issued securities, they could be used to hedge risk. Thus, in 1975, financial derivatives were born.
  

Which is the true definition of Junk bonds?

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  Junk Bonds (Some firms that had fallen on bad times had previously issued long-term corporate bonds with ratings that had now fallen below Baa, bonds that were pejoratively dubbed “junk bonds.”)
  

Nowadays, leasing services are now provided by commercial banks too. In which institution is the cost of leasing services reduced, in commercial bank or leasing company?