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

question 71

Multiple Choice

Recall Application 4, "Securitization: the Good, the Bad, and the Ugly," to answer the following questions:
-According to the Application, most of the economy's financial woes can be traced back to a new innovation called:

• A) open market operations.
• B) Fannie Mae.
• C) Freddie Mac.
• D) securitization.

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Definitions:

General Motors

An American multinational corporation headquartered in Detroit that designs, manufactures, markets, and distributes vehicles and vehicle parts.

Greenmail

A situation where a company pays a premium to buy back its own stock from a shareholder to avert a takeover attempt.

Takeover Attempt

An effort by one company to acquire control of another company, often through the purchase of a majority of its stock.

Share Rights Plan

A strategy used by companies to defend against hostile takeovers by allowing shareholders to buy additional shares at a discount.