Which of the Following Is True About Mortgage-Backed Securities

question 21

Multiple Choice

Which of the following is true about mortgage-backed securities
I. They aggregate individual home mortgages into homogeneous pools.
II. The purchaser receives monthly interest and principal payments received from payments made on the pool.
III. The banks that originated the mortgages maintain ownership of them.
IV. The banks that originated the mortgages continue to service them.

• A)II, III, and IV
• B)I, II, and IV
• C)II and IV
• D)I, III, and IV
• E)I, II, III, and IV

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Definitions:

Marginal Propensity to Consume

The proportion of an increase in income that an individual or population spends on goods and services as opposed to saving.

MPC

Stands for Marginal Propensity to Consume, which measures the portion of additional income that an individual spends on consumption.

Multiplier Value

A factor that quantifies the impact of a change in some economic activity on the rest of the economy.

MPC (Marginal Propensity to Consume)

A measure of the change in consumption resulting from a change in income; specifically, the proportion of additional income that is spent on consumption.