When Groups of Mortgages Are Bundled Together by Financial Institutions

question 59

Multiple Choice

When groups of mortgages are bundled together by financial institutions and sold to investors, these institutions are said to be ________ mortgage loans.

• A)securitizing
• B)underwriting
• C)liquidating
• D)harvesting

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Definitions:

Marginal Cost

The additional cost incurred in producing one more unit of a product or service, critical for making production decisions.

Contribution Margin

The contribution margin represents the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs, contributing to profit.

Fixed Cost

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Hard Rationing

A situation where capital is not available to a company under any circumstances, often due to economic conditions or poor company performance.