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:

FIFO Method

Another term for FIFO, emphasizing its role as an accounting method where the oldest inventory items are recorded as sold first.

Equivalent Unit

A concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units that could have been produced with the same amount of input.

Cost Assignment

The process of identifying and allocating costs to cost objects, such as products, services, or departments.

Work in Process

Items that are in the production process but have not yet been completed, representing a component of inventory costs.