Mortgage-related securities:
A)are securities whose value depends on the value of mortgage-backed securities
B)came to be known as 'toxic securities'
C)were erroneously rated as being safe ('AAA')by the ratings agencies
D)magnified the impact of defaulting sub-prime loans throughout the US financial system.
E)All of these.

Question

Quizplus · Accepted Answer

Mortgage-related securities are securities whose value depends on the value of mortgage-backed securities. They became known as toxic securities when many borrowers had defaulted on their sub-prime loans. These securities were erroneously rated as being safe ('AAA') by rating agencies, which magnified the impact of defaulting sub-prime loans throughout the US financial system. Hence, all of the given choices are correct.

Mortgage-Related Securities