Which of the Following Statements Regarding Subprime Mortgages Is TRUE

question 12

Multiple Choice

Which of the following statements regarding subprime mortgages is TRUE?

• A) Subprime mortgages are not Ginnie Mae guaranteed, so CMO investors are exposed to default risk
• B) Subprime mortgages are not Ginnie Mae guaranteed, so securities backed by subprime mortgages cannot be issued
• C) CMOs backed by subprime mortgages cannot be used as collateral for CDOs
• D) Because of diversification, securities backed by subprime loans and no more risky than those back by prime loans

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