Explain How Interest Rate Risk Could Change at Banks,thrifts,and Other

question 28

Essay

Explain how interest rate risk could change at banks,thrifts,and other institutions that originate and sell fixed-rate mortgages but are funded with deposits if these institutions lose the ability to securitize and sell mortgages. What could be the effect on the economy?

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Definitions:

AV Valve

Short for atrioventricular valve, it relates to the valves between the atria and ventricles of the heart that prevent backflow of blood.

Pulmonary Semilunar Valve

A heart valve that is a semilunar valve. It is situated between the right ventricle and the pulmonary trunk.

Right Ventricle

The lower right chamber of the heart that receives deoxygenated blood from the right atrium and pumps it into the lungs via the pulmonary artery.

Pulmonary Semilunar Valve

A valve in the heart located between the right ventricle and the pulmonary artery, preventing backflow of blood into the heart.