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As the housing bubble began to burst in 2006-2008, investors would only buy mortgage-backed securities at high yields to compensate for higher perceived default risk. As a result
A) banks suffered significant capital losses as the value of their holdings of mortgage-backed securities declined.
B) funds available for mortgages increased.
C) bank profits rose as they earned higher interest on mortgages.
D) the price of mortgage-backed securities tended to rise due to the higher yields.
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Money, Banking, and the Financial System

Money, Banking, and the Financial System


Edition: 3rd
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