Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Describe the types of risk associated with mortgages.
Expert Solution
Step 1
Mortgage-backed securities:
A mortgage backed security is an obligation that represents a claim on the cash flow from the mortgage loans on houses properties. The securitization refers to the process of pooling mortgages. The other types of loans and then selling claims or securities against that pool in a secondary market. These securities are called mortgage-backed securities.
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