Which of the following describes a toxic asset on a banks


Which of the following describes a "toxic" asset on a bank's balance sheet? I. Home mortgages for which scheduled payments are not being made II. Loans made to consumers who are no longer meeting the terms of the lending agreement III. Credit derivatives

A. I and II only B. I and III only C. II and III only D. I, II, and III

From 2002 to 2006:

I. Housing prices rose

II. Profitability for mortgage originators and lenders was high

III. Underwriting standards for subprime mortgages were raised restricting high-risk borrowers

A. I only

B. II only

C. I, II and III

D. I and II only

During the 2007-2009 Financial Crisis:

I. Banks' balance sheets strengthened with the increase in availability of credit

II. The value of mortgage baked securities and CDOs increased significantly due to falling interest rates

III. The decline in US housing prices led to rising defaults on mortgages

A. I only

B. II only

C. III only

D. II and III only

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Financial Management: Which of the following describes a toxic asset on a banks
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