Back to Assignment Attempts: Keep the Highest: 1 7. Securities and risks ? are d

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Back to Assignment Attempts: Keep the Highest: 1 7. Securities and risks ? are derivatives that function like an insurance policy that protects lenders against a third party's default on a debt. During the financial crisis of 2007-2009, many buyers of such derivatives faced bankruptcy because: O A major seller had miscalculated the default risks of securities it had insured with such derivatives The U.S. government refused to bail out financial firms that issued such derivatives O Homeowners refused to borrow mortgage loans from lenders that bought such derivatives Grade It Now Save & Continue Continue without saving Type here to search

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Solution:

During the financial crisis of 2007-09, many buyers of mortgage based derivatives faced bankruptcy because: A major seller had miscalculated the default risks of securities it had insured with such derivatives.

In second or third year of interest only period, borrowers defaulted and the insurers could not recover from the crash of the market.

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