Recall Application 4, "Securitization: the Good, the Bad, and the Ugly

question 115

Multiple Choice

Recall Application 4, "Securitization: the Good, the Bad, and the Ugly," to answer the following questions:
-According to the application, the reason why investors were lured into purchasing securities comprised of "subprime" loans was that:

• A) the risks were low even if the real estate market headed south.
• B) the securities were so new that investors did not completely understand the risks.
• C) the subprime loans were FDIC insured.
• D) All of the above are correct.

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Definitions:

Tort Liability

Legal responsibility for damages caused by a civil wrong or injury other than breach of contract.

Employers

Organizations or individuals who hire others to perform services in exchange for compensation.

Independent Contractors

Individuals or entities hired to perform specific tasks or services for a company but are not considered employees of the company.

Exclusive Agency Contract

A binding agreement between a principal and an agent granting the agent the sole rights to act on the principal's behalf within a certain market area or for specified activities.