The Emergence of Mortgage Securities Propelled the Development of Mortgage

question 25

Multiple Choice

The emergence of mortgage securities propelled the development of mortgage companies, an entity significantly different from the thrifts and banks that previously dominated the mortgage landscape. Which of the following parties is responsible for providing mortgage origination services and initial funding within this new framework?

• A) Mortgage banker
• B) Mortgage broker
• C) Portfolio lender
• D) Security analyst

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Definitions:

Accounting Profits

The net earnings of a company calculated according to generally accepted accounting principles, taking into account all explicit costs but not implicit costs.

Implicit Cost

Costs that represent the loss of potential gain from using assets in an alternative option rather than in their current use.

Implicit Costs

The opportunity costs of resources that are owned by the firm and used in production, not involving direct payment of money but affecting the firm's profitability.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.