Which of the Following Explains Why Mortgages Weren't Considered Securities

question 126

Multiple Choice

Which of the following explains why mortgages weren't considered securities prior to 1970?

• A)The Federal Reserve Act of 1913 prohibited mortgages from being considered securities.An amendment to the Act was approved in 1970 that allowed mortgages to be considered securities.
• B)Until 1970,the average annual increase in housing prices did not allow the buying and selling of mortgages to be profitable.There has been a significant annual increase in housing prices and mortgage values since 1970.
• C)Congress passed a law in 1970 stipulating that mortgages could be classified as securities.
• D)Prior to 1970,mortgages were rarely resold in the secondary market.

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Definitions:

Internal Control

Systems and procedures designed to ensure the accuracy and reliability of financial reporting, compliance with laws and regulations, and effective and efficient operations.

Voucher Register

A record of vouchers that have been prepared, authorized, and paid; it serves as a chronological record of business transactions.

Petty Cash

A small amount of cash kept on hand in a business for making everyday, minor expenditures.

Cash Reserve

Funds that a company sets aside to meet short-term and emergency funding needs.