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Mortgage Plus Inc

Question 18

Multiple Choice

Mortgage Plus Inc.made outstanding profits selling derivative asset-backed investments based on subprime mortgage products.Which of the following best describes the incentive to mortgage lenders to bundle derivative investment products with subprime mortgage loans?


A) Mortgage lenders were able to avoid all risk of loss from borrower default.
B) Borrowers were able to escape consequences of default on payments.
C) Risk of loss to mortgage lenders resulting from borrower default was less.
D) Mortgage lenders could share risk of loss from borrower default.

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