Fin 352 Essay Example | Topics and Well Written Essays - 500 words

Fin 352 - Essay Example Securitization is the pooling of various contractual debt types like commercial and residential mortgages and selling them in consolidation to various investors as pass-through securities, bonds or as collateralized mortgage obligation. Receivables are taken â€Å"off balance sheet† then replaced with equivalents in cash. This improves an originator’s balance sheet, securitization can thus enhance the managerial control over structure and size of a company’s balance sheet. Financial leverage refers to the techniques used to multiply either gains or losses. Many times it involves buying a lot of assets using borrowed funds in anticipation that the appreciation will be higher than the borrowing cost. In futures markets, leverage is having control over huge cash amounts for commodities that have comparatively small capital levels. In futures markets, price leveraging is common resulting in small changes in futures prices translating into huge gains or