Which of the following are off-balance-sheet activities?
A) taking loans from the Fed
B) issuing mortgage backed securities
C) both of the above
D) neither of the above

Question

Quizplus · Accepted Answer

Issuing mortgage-backed securities is an off-balance-sheet activity because it involves creating securities that are backed by a pool of mortgages, which are then sold to investors, thus not appearing on the bank's balance sheet directly. Taking loans from the Fed would be considered an on-balance-sheet activity, as it directly affects the bank's balance sheet by increasing its liabilities.

Which of the Following Are Off-Balance-Sheet Activities