QUESTION 15 Mortgage-backed securities have been growing in popularity in recent

Question

QUESTION 15

Mortgage-backed securities

have been growing in popularity in recent years as institutional investors look for attractive investment opportunities.

are securities collateralized by a pool of mortgages.

are securities collateralized by both insured and uninsured mortgages.

are all of the above.

have been growing in popularity in recent years as institutional investors look for attractive investment opportunities.

are securities collateralized by a pool of mortgages.

are securities collateralized by both insured and uninsured mortgages.

are all of the above.

Explanation / Answer

All of the statements are correct.

A mortgage backed securities is a basically a debt instrument, collateralized by a pool of mortgages, these mortgages are generally insured, but they can be uninsured as well. The mortgage backed securities provide a slightly higher return than a normal bond this is why it is getting popular day by day and investors looking for an opportunity are investing in it.

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