HELP PLEASEEE!!! Which of the following is not a principal-agent problem resulti
ID: 2642596 • Letter: H
Question
HELP PLEASEEE!!!
Which of the following is not a principal-agent problem resulting from the originate-to-distribute business model? A. When mortgage brokers do not intend to hold the mortgage loans they make: they have little reason to be concerned whether the borrower can pay off the loan. B. Since mortgage brokers do not intend to hold the mortgage loans they make, they take extra care to gather as much information as possible about the borrower. C. When investors are willing to purchase bundled mortgage-backed securities, it is in the best interest of mortgage brokers to make lots of loans. D. When investors purchase mortgage-backed securities, it is in their best interest to purchase low-risk securities, which may be contrary to the mortgage brokers' best interest.Explanation / Answer
Ans:
B)
Since mortgage brokers do not intend to hold the mortgage loans they make, they take extra care to gather as much information as possible about the borrower.
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