SIE practice questioneasyMortgage-Backed Securities
A bond backed by a pool of mortgage loans most likely is a:
- ACommercial paper
- BMortgage-backed security✓ Correct answer
- CTreasury note
- DMunicipal bond
Explanation
Why B — Mortgage-backed security
Mortgage-backed securities are created from pools of mortgage loans. Commercial paper is short-term corporate debt; Treasury notes are government securities; municipal bonds are issued by local governments.
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