The widely publicized subprime lending crisis was not caused by
A)Capital market participants who acted in their own self-interest.
B)A lack of transparency.
C)A lack of investor understanding of the investment's true risk.
D)The practice of securitizing assets.

Question

Quizplus · Accepted Answer

The subprime lending crisis was primarily caused by the practice of securitizing assets, particularly subprime mortgages that were bundled together and sold as securities. This led to a widespread distribution of risk and a disconnect between the original lender and the borrower, which ultimately contributed to the collapse of the housing market and the financial crisis of 2008. While factors such as self-interest, lack of transparency, and investor understanding certainly played a role, they were not the primary causes of the crisis.

The Widely Publicized Subprime Lending Crisis Was Not Caused by