Question

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.

		Fannie Mae and Freddie Mac
		Ginnie Mae
		Freddie Mac
		Fannie Mae
		Ginnie Mae and Fannie Mae

Certificates of deposit are insured by the

		CFTC.
		FDIC.
		SPIC.
		Lloyds of London.
		All of the options are correct.

Answer 1

To answer this question we first need to understand about the Mortgage backed securities(MBS):

Mortgage Backed Securities(MBS): It is a debt security which is collateralized by a number of mortgages, it is also traded on a secondary market.

Now to answer above question, In 1938 government created Fannie Mae a government sponsored agency to buy Federal Housing Administration(FHA) mortgages. Later Fannie mae was splitted into Fannie Mae and Ginnie Mae to support FHA.

But, in 1970 government created another agency Freddie Mac to perform the same task as performed by both.

Freddie Mac & Fannie Mae they buy large number of mortgages to sell investors, and then this pool of securities were called as MBS(mortgage backed securities).

Hence, option (a) is correct in response to the above question.

Certificates of deposits are insured by FDIC, FDIC stands for Federal Deposit Insurance Corporation, it is an independent agency created by US government to maintain confidence in US financial system.

FDIC provides insurance to deposits and examines and also supervise financial institution for safety and proper functioning of it.

Hence, option(b) is correct here.