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

question 148

Multiple Choice

Recall Application 4, "Securitization: the Good, the Bad, and the Ugly," to answer the following questions:
-According to the application, "subprime" loans are loans that are:

• A) low risk bonds sold to homeowners to finance their mortgages.
• B) offered below prime interest rates.
• C) offered to borrowers who would not qualify for loans using traditional criteria.
• D) sold to the U.S. Treasury.

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Definitions:

Avoid Losses

A principle in behavioral finance and economics indicating people's tendency to prefer avoiding losses to acquiring equivalent gains, known as loss aversion.

Kahneman And Tversky

Psychologists noted for their work on the psychology of judgment and decision-making, as well as behavioral economics.

Risks

Potential events or actions that may cause loss or hinder achievement of objectives.

Probability Of Success

The likelihood of achieving a goal or completing a task successfully, often expressed as a percentage.