During a weak economy, the credit risk to a financial institution from investing in mortgage-backed securities representing subprime mortgages is ____ than that of mortgage-backed securities representing prime mortgages.

Question

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During a weak economy, the credit risk associated with subprime mortgages increases significantly. This is because subprime borrowers have less stable employment and income, making them more likely to default on their mortgage payments. Therefore, mortgage-backed securities representing subprime mortgages have a higher credit risk than those representing prime mortgages.

During a Weak Economy, the Credit Risk to a Financial