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SPV's financed their purchases of mortgage pools primarily by, a. Deposits b. Loans from traditional banks...

SPV's financed their purchases of mortgage pools primarily by,

a. Deposits

b. Loans from traditional banks

c. Regular commercial paper

d. Asset-backed commercial paper

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Answer #1

Asset-backed commercial paper is a short-term money-market security that is issued by a specific purpose vehicle or conduit,which is set up by a sponsoring financial instution.The maturity date of asset abcked commercial paper is no more than 270 days and issued either on the interest-bearing or discount basis.

SPV's financed their purchases of mortgage pools primarily by (D) Asset-backed commercial paper and option D is correct.

Rest of the options Deposits,Loans from traditional banks and regular commercial paper are all false as they relates to instruments from banking sector and financial sector not SPV.

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