Mortgage-backed securities are defined as securities whose investment returns are based on which one of the following?

Question

Quizplus · Accepted Answer

Mortgage-backed securities are based on a pool of mortgages, where investors receive returns based on the interest payments made by the homeowners. These mortgages are packaged in a security, which is sold to investors. The cash flow from the underlying pool of mortgages is used to pay the interest and principal on the mortgage-backed securities. Therefore, the correct answer is E.

Mortgage-Backed Securities Are Defined as Securities Whose Investment Returns Are