how-did-the-bundling-of-mortgages-into-mortgage-backed-securities-affect-the-per

Question

How did the bundling of mortgages into mortgage-backed securities affect the perception of risk?

Accepted Answer

It masked the true risk by combining high-risk and low-risk loans, making them appear safer.

Answer

It increased the perceived risk, leading to higher interest rates.

Answer

It reduced the perceived risk by excluding high-risk loans.

Answer

It had no effect on the perception of risk.