The Subprime Financial Crisis of 2007 2008
1) Financial innovations that emerged after 2000 in the mortgage markets included all of the following except
A) adjustable rate mortgages.
B) subprime mortgages.
C) Alt A mortgages.
D) mortgage backed securities.
2) ________ is a process of bundling together smaller loans (like mortgages) into standard debt securities.
A) Securitization
B) Origination
C) Debt deflation
D) Distribution
3) A ________ pays out cash flows from subprime mortgage backed securities in different tranches, with the highest rated tranch paying out first, while lower ones paid out less if there were losses on the mortgage backed securities.
A) Collateralized debt obligation (CDO)
B) Adjustable rate mortgage
C) Negotiable CD
D) Discount bond