Which of the following is FALSE about the mortgage-backed securities?
A)many of them were purchased by financial investors who had no idea how risky they were
B)they were marketed as virtually risk-free even though they were actually very risky
C)in principle they spread risk more widely and allow banks to make more loans
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Mortgage-backed securities (MBS) were indeed purchased by many financial investors who underestimated their risk (A), were often marketed as being safer than they actually were (B), and in theory, they do spread risk more widely and enable banks to issue more loans (C). Therefore, none of the statements A, B, or C is false about mortgage-backed securities.

Which of the Following Is FALSE About the Mortgage-Backed Securities