A mortgage-backed security is an asset that:
A)only homeowners are allowed to purchase.
B)provides earnings to its owner based on payments made by people on their home loans.
C)the Federal Reserve uses to implement monetary policy.
D)is an important part of the circular-flow diagram.

Question

Quizplus · Accepted Answer

A mortgage-backed security is a type of investment that is backed by a pool of mortgages. The earnings generated by the security are based on the payments made by the homeowners on their home loans. These securities are typically bought and sold on the secondary market by investors looking to earn a return.

A Mortgage-Backed Security Is an Asset That