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During the Credit Crisis of 2008, What Did Insuring Credit

Question 60

Multiple Choice

During the credit crisis of 2008, what did insuring credit default swaps mean?

A) The banks had to bear the risks of all mortgages in case of a default.
B) The issuers of mortgage-backed securities were responsible for payment to mortgage-backed securities investors in case of a default.
C) The banks that had provided loans at sub-prime rates were responsible for payment in case of a default.
D) The insurance companies would not be responsible for payments related to mortgage-backed securities.
E) The insurer, rather than the MBS issuer, will deliver the promised payment to mortgage-backed securities investors in the event of default.

Correct Answer: