Question

What is the difference between a mortgage and a ​mortgage-backed security​?

a. no interest is paid on​ mortgage-backed securities, whereas interest and principal payments are paid on mortgages.
b. mortgages are provided to households or​ firms, whereas​ mortgage-backed securities are provided mainly to financial institutions.
c. mortgages are​ loans, whereas​ mortgage-backed securities are​ bond-like debt instruments.
d. mortgages are usually used to create a​ portfolio, whereas​ mortgage-backed securities are held separately?

Answer 1

I think the answer is C.Mortgages are loans, whereas mortgage-backed securities are bond-like debt instruments.  MBS  or mortgage-backed- securities are secured by other real estate loans or by home. It represents the amount of interest on mortgage loans and they are secured by a mortgage or collection of mortgages.