Question

A column in the New York Times noted that during the housing boom that ended in 2006: open double quote"Global banks had loaded up on these supposedly safe securities, and were at risk of becoming insolvent when their true value became known. Some banks blew up; others were bailed out.

Source: Neil Irwin, open double quote"What 'The Big Short' Gets Right, and Wrong, About the Housing Bubble, close double quote" New York Times ,December 22, 2015.

Which of the following are the securities the columnist is referring to?

A.

Mortgage-backed securities.

B.

Commercial paper.

C.

Tax-deferred annuities.

D.

Government bonds.

What caused the value of these securities to decline?

A.

Lower interest rates.

B.

Recession.

C.

Declining property values.

D.

Inflation.

Answer 1

A.

C.

Step-by-step explanation:

A. Mortgage-backed securities.

C. Declining property values.

The housing bubble caused the values of mortgaged properties to go down during the financial crisis of 2007-08. the banks thought ther were investing in safe securities since the loans were mortgaged against properties.