When a Bank Securities a Parcel of Its Home Loans

question 108

Multiple Choice

When a bank securities a parcel of its home loans, the credit risk posed by the loans is borne by:

• A)the bank whose loans are being sold
• B)the special purpose vehicle
• C)investors in the mortgage backed securities
• D)the ratings agency
• E)None of these.

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Definitions:

Segmented Income Statement

A financial report that separates a company's operations into divisions, regions, or other segments to analyze performance individually.

Fixed Expenses

Consistent costs that do not change in total over a short period, regardless of the level of production or sales.

Accumulated Depreciation

Accumulated depreciation represents the total amount of depreciation expense that has been recorded against a fixed asset over its useful life.

Operating Costs

Expenses associated with the day-to-day functionalities of a business, including costs for materials, labor, and overhead.