Reference no: EM131814603

1. Which of the following is true concerning mortgage securitization?

I. All subprime mortgage bond tranches were pooled as collateralized debt obligations (CDOs)

II. Once a CDO was created and rated, it became ineligible for further securitization

III. A lower-rated tranch of securities could never be given a higher rating in a new pool of CDOs

A. I and II only B. I and III only C. II and III only D. I, II, and III E. None of the above

2. Which of the following statements is true concerning so-called "shadow banking?"

I. A significant amount of financing is being done in the "shadow banking" sector

II. The regulatory structure of shadow banking has kept pace with the financial innovation of the past twenty-five years

III. It is illegitimate to place any blame for the U.S. financial crisis of 2008-2009 on shadow banking, since this crisis would likely have occured anyway

A. I only

B. II only

C. III only

D. I and III only

E. II and III only

3. Collateralized mortgage obligations (CMOs) are:

I. Backed by pooled mortgage backed securities

II. A type of collateralized debt obligation

III. Given a rating according to tranche by a credit rating agency

A. I only

B. I and II only

C. I and III only

D. II and III only

E. I, II, and III