In the mortgage securitization process, "tranching" means:
a. Separating mortgage cash flows into securities of varying risks and returns.
b.Pooling risks by combining mortgages with high and low credit ratings.
c. Creating a whirlpool of speculative activity by offering easy credit terms to borrowers who do not have the capacity repay their loans.
d. Creating new incentives for families to own homes.
e. None of the above.
.A
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One advantage of a fixed exchange rate system compared to a floating or managed float exchange rate system is
A) it is easier for central banks to control inflation. B) there is no need for government intervention. C) it allows the exchange rate to reflect demand and supply in the market. D) it eliminates the possibility of depreciation during a recession.
Which of the following is not a rationale for government involvement in health care markets?
a. Government involvement is necessary to prevent the spread of contagious diseases, which are type of externality. b. Government involvement is necessary to provide individuals with information on the quality of health care by regulating drugs and physicians. c. Government involvement is necessary to ensure that physicians do not form illegal cartels to restrict entry into medicine in order to increase profits. d. Government involvement is necessary to ensure that everyone has health insurance and thus can gain access to health care.