Final answer:
The secondary mortgage market is where loans originated in the primary market are sold to other financial institutions. The value of the loans in this market is affected by factors such as the riskiness of the loan and the comparison of the loan's interest rate with the current interest rate in the economy.
Step-by-step explanation:
The secondary mortgage market is the market in which loans originated in the primary market are sold. In this market, financial institutions buy and sell loans that were made by other institutions or lenders. For example, a bank may issue a mortgage loan to a borrower but then sell that loan to another bank or financial institution.
One key factor that affects the price financial institutions are willing to pay for a loan in the secondary market is the perceived riskiness of the loan. Another factor is the comparison of the interest rate of the loan with the current interest rate in the economy. These factors can influence the value of the loans in the secondary market.