In events leading to the housing bubble, investment banks on Wall Street made money through the housing market by:
A. buying as many loans as possible to create mortgage-backed securities.
B. offering low interest loans to those with very good credit.
C. relying on banks to sell as few high-risk mortgages as possible.
D. ensuring local banks were making good loans.
Answer: A
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The cab fare in Horseville is regulated. Recently, the government decided to raise it from $2.00 to $2.50 per ride. After this rise in fare, cab ridership decreased by 10 percent
a) What is the price elasticity of demand for cab rides in Horseville? (Use the midpoint formula to calculate the percentage change in the price.) Is the demand for rides elastic or inelastic? b) According to your estimate, what happened to the cab drivers' revenue after the fare rose? Explain. c) Why might your estimate of elasticity be inaccurate?
A famous novelist holds the copyright to her literary works. She creates a monopoly by: a. limiting the number of books she writes
b. cutting down per unit production cost. c. restricting other authors from plagiarizing her work. d. restricting the demand for her books.