A mortgage-backed security is an asset that provides earnings to its owner based on interest on the national debt paid by the Federal Reserve.

Question

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A mortgage-backed security is a type of investment that is backed by a pool of mortgage loans. The earnings generated by the mortgage-backed security come from the interest and principal payments made by the homeowners whose mortgages make up the pool. The Federal Reserve does not pay interest on national debt to owners of mortgage-backed securities.

A Mortgage-Backed Security Is an Asset That Provides Earnings to Its