A. they insulated the banking system from any risk associated with mortgage defaults.
B. they greatly reduced the overall risk of mortgage defaults.
C. buyers of these securities assumed all of the risk of mortgage defaults.
D. they reduced their direct exposure to mortgage default risk but were still exposed through
loans to investors in mortgage-backed securities.
ANSWER:
D. they reduced their direct exposure to mortgage default risk but were still exposed through
loans to investors in mortgage-backed securities.