A Mortgage Backed Security Is

question 9

Multiple Choice

A mortgage backed security is

• A)A share of common stock based upon home mortgages
• B)A financial instrument that reduces risk by pooling together a large number of mortgages into one asset
• C)A financial instrument developed to reduce liquidity in the housing market
• D)A financial instrument that is the combination of only subprime mortgages
• E)All of the above

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Definitions:

Confidence Interval

A scope of values, extracted from sample studies, that is likely to enclose the value of an unknown characteristic of the population.

T-Distribution

A statistical distribution used when estimating population parameters of a normally distributed population in situations where the sample size is small and the population standard deviation is unknown.

Degrees of Freedom

The count of separate values or amounts assignable to a statistical distribution.

Right Skewed

Describes a distribution where the tail is longer on the right side of the data's peak, indicating a greater number of high-value outliers.