The role of mortgages in the financial crisis Which of the following is a factor

Question

The role of mortgages in the financial crisis Which of the following is a factor that contributed to the financial crisis? The housing bubble in the United States affected only a few regions. Large banks held large numbers of mortgage-backed securities. Mortgage-backed securities are fundamentally a bad idea. Asset prices and bubbles When is a price increase of an asset not a bubble? When the value of services the asset provides over its life or the discounted value of the sum of future revenues from the asset remains unchanged When the price increase is based on a correct estimate of the future value of the asset When the price of an asset is being bidded up through speculation or gambling

Explanation / Answer

5. Its 2nd option- large banks held large number of mortgage backed securities. Failure of these mortgage backed securities led to failure of these large banks. Crisis spread from one bank to other.

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