The Introduction of the Practice of Securitization Allowed

question 43

Multiple Choice

The introduction of the practice of securitization allowed:

• A)banks to more safely assume subprime mortgage loans.
• B)the government to promote a sense of security in the banking industry.
• C)banks to more safely leverage their investments.
• D)All of these statements are true.

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Definitions:

Collude

Cooperative behavior between firms in a market to set prices or output levels artificially high, typically in a way that is not in the best interests of consumers.

Maximize Profits

The process of increasing the difference between total revenue and total costs to reach the highest possible financial gain.

Identical Costs

Costs that are the same in value or magnitude for different firms or production processes.

Price Elasticity

An economic measure of the change in the quantity demanded or purchased of a product in relation to its price change.