The financial crisis occurred in 2008 in large part because of losses on securities consisting of bundles of mortgage loans known as
A)home loan loss reserves.
B)credit default swaps.
C)mortgage-backed securities.
D)naked put options.

Question

The financial crisis occurred in 2008 in large part because of losses on securities consisting of bundles of mortgage loans known as
A)home loan loss reserves.
B)credit default swaps.
C)mortgage-backed securities.
D)naked put options.

Quizplus · Accepted Answer

The financial crisis of 2008 occurred in large part because of losses on mortgage-backed securities, which were bundles of mortgage loans that were packaged and sold to investors. As home prices started to decline, many of these securities became worthless, leading to large losses for banks and other financial institutions that held them.

The Financial Crisis Occurred in 2008 in Large Part Because