A security that pays off the return from a combination of mortgages is called a
A)homeowners' equity claim
B)mortgage portfolio
C)mortgage option
D)mortgage-backed security
E)none of the above

Question

Quizplus · Accepted Answer

A security that pays off the return from a combination of mortgages is called a mortgage-backed security. It represents a claim on the cash flows generated by a pool of mortgages and allows investors to participate in the income generated by a large number of mortgage loans. The mortgages are bundled together and sold to investors as securities, allowing issuers to raise funds for lending while investors receive a stream of income based on the mortgage payments.

A Security That Pays Off the Return from a Combination