49) Until 1999, the ________ Act(s) prohibited banks in the United States from both accepting deposits and underwriting securities.
A) Sarbanes-Oxley
B) Glass-Steagall
C) SEC
D) Sarbanes-Oxley and SEC
E) None of the options
50) The spread between the LIBOR and the Treasury-bill rate is called the
A) term spread.
B) T-bill spread.
C) LIBOR spread.
D) TED spread.
51) Mortgage-backed securities were created when ________ began buying mortgage loans from originators and bundling them into large pools that could be traded like any other financial asset.
A) GNMA
B) FNMA
C) FHLMC
D) FNMA and FHLMC
E) GNMA and FNMA
52) The sale of a mortgage portfolio by setting up mortgage pass-through securities is an example of
A) credit enhancement.
B) credit swap.
C) unbundling.
D) derivatives.
53) Which of the following is true about mortgage-backed securities? I) They aggregate individual home mortgages into homogeneous pools.II) The purchaser receives monthly interest and principal payments received from payments made on the pool.III) The banks that originated the mortgages maintain ownership of them.IV) The banks that originated the mortgages may continue to service them.
A) II, III, and IV
B) I, II, and IV
C) II and IV
D) I, III, and IV
E) I, II, III, and IV
54) ________ were designed to concentrate the credit risk of a bundle of loans on one class of investor, leaving the other investors in the pool relatively protected from that risk.
A) Stocks
B) Bonds
C) Derivatives
D) Collateralized debt obligations
E) All of the options
55) ________ are, in essence, an insurance contract against the default of one or more borrowers.
A) Credit default swaps
B) CMOs
C) ETFs