Goldman Sachs' GSAMP Trust Was Able to Create AAA Rated

question 12

Multiple Choice

Goldman Sachs' GSAMP Trust was able to create AAA rated securities by

• A) separating the mortgage portfolio into tranches and assigning the tranches to share risks of default equally.
• B) not disclosing the risks clearly.
• C) guaranteeing or protecting some tranches.
• D) separating the mortgage portfolio into tranches and designating the A-1, A-2, and A-3 tranches last in order, after the M-1 to M-7 and B-1 to B-3 tranches, to suffer losses if a default occurred.
• E) All of these are correct.

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Definitions:

Target Commitment

A state in which individuals or groups are wholly dedicated to achieving a specific goal.

Personal Appeal

Refers to the charismatic and attractive qualities of an individual that make them likable or persuasive to others.

Power Sources

The origins or bases from which an individual or organization draws the ability to influence others.

Position Power

denotes the authority and influence an individual holds in an organization due to their official role or position, rather than personal characteristics.