Problem
1. If you were watching house prices rise during the years 2000-2006, how might you have decided whether or not you were witnessing a "bubble"?
2. What factors do you think bankers normally use to distinguish "prime" borrowers from "subprime" borrowers?
3. Explain why a mortgage-backed security becomes riskier when the values of the underlying houses decline. What, as a result, happens to the price of the mortgage-backed security?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.