Question

The creation of subprime mortgages and selling of mortgages backed securities lead to... a). screening, b). warranty, c). moral hazard, d). adverse selection

Answer 1

The creation of subprime mortgages and selling of mortgages backed securities lead to

c) moral hazard

The subprime mortgage crisis happened when banks sold an excessive number of mortgages to nourish the interest for mortgage-upheld securities. At the point when home costs fell in 2006, it activated defaults. The hazard spread into common assets, annuity assets and enterprises who claimed these subordinates. It prompted the 2007 managing an account crisis, the 2008 monetary crisis and the most exceedingly awful retreat since the Great Depression.

Here's the course of events from the early cautioning signs in 2003 to the fall of the lodging market in late 2006. Continue perusing to comprehend the connection between loan costs, land and whatever remains of the economy.