Which of the Following Is FALSE About the Mortgage-Backed Securities

question 26

Multiple Choice

Which of the following is FALSE about the mortgage-backed securities?

• A)many of them were purchased by financial investors who had no idea how risky they were
• B)they were marketed as virtually risk-free even though they were actually very risky
• C)in principle they spread risk more widely and allow banks to make more loans
• D)all of the above
• E)none of the above

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Definitions:

Simple Linear Regression

A statistical method for modeling the relationship between a single independent variable and a single dependent variable, assuming a linear relationship.

Residuals

The differences between observed values and the values predicted by a statistical model, indicating the model's accuracy.

Fitted Values

Predicted values calculated from a model that represent the estimated response given the predictors.

Simple Linear Regression

A statistical method that models the relationship between two variables by fitting a linear equation to observed data.