1. Which of the following is true concerning mortgage securitization?
I. All subprime mortgage bond tranches were pooled as collateralized debt obligations (CDOs)
II. Once a CDO was created and rated, it became ineligible for further securitization
III. A lower-rated tranch of securities could never be given a higher rating in a new pool of CDOs
A. I and II only B. I and III only C. II and III only D. I, II, and III E. None of the above
2. Which of the following statements is true concerning so-called "shadow banking?"
I. A significant amount of financing is being done in the "shadow banking" sector
II. The regulatory structure of shadow banking has kept pace with the financial innovation of the past twenty-five years
III. It is illegitimate to place any blame for the U.S. financial crisis of 2008-2009 on shadow banking, since this crisis would likely have occured anyway
A. I only
B. II only
C. III only
D. I and III only
E. II and III only
3. Collateralized mortgage obligations (CMOs) are:
I. Backed by pooled mortgage backed securities
II. A type of collateralized debt obligation
III. Given a rating according to tranche by a credit rating agency
A. I only
B. I and II only
C. I and III only
D. II and III only
E. I, II, and III