According to the textbook, both traditional and subprime mortgage default rates were shown to be pro-cyclical.

Question

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Traditional mortgage default rates are typically pro-cyclical, meaning they tend to rise during economic downturns. However, subprime mortgage default rates have not consistently shown the same pro-cyclical pattern and can be affected by different factors, including the specific characteristics of borrowers and the terms of the loans.

According to the Textbook, Both Traditional and Subprime Mortgage Default