A Fundamental Problem with Goldman Sachs' GSAMP Trust Was That

question 9

Multiple Choice

A fundamental problem with Goldman Sachs' GSAMP Trust was that

• A) loans were given to people with poor credit histories.
• B) homeowners' equity in the securitized mortgages was less than 1 percent on average.
• C) loans were given to people with no income.
• D) a sizeable portion of the securitized loans had little or no documentation.
• E) All of these are correct.

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Definitions:

Indirect Approach

A communication strategy that involves conveying a message in a roundabout way, rather than stating it directly, often used to soften the impact.

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Speculation

The act of forming theories or conjectures without firm evidence, often about financial markets or future events.

Cause

A factor or event that brings about an effect or a change in a situation.