#1
What is a subprime mortgage?
A mortgage offered to borrowers with poor credit scores
ExplanationHigh-interest loans for individuals with low creditworthiness.
#2
When did the subprime mortgage crisis occur?
2007
ExplanationThe financial crisis peaked in 2007 due to the subprime mortgage meltdown.
#3
What contributed to the subprime mortgage crisis?
Widespread issuance of risky mortgages
ExplanationRisky mortgage practices led to a widespread financial collapse.
#4
How did the subprime mortgage crisis impact the housing market?
Decreased demand for housing
ExplanationHousing demand plummeted amidst the subprime mortgage crisis.
#5
What is a collateralized debt obligation (CDO)?
A financial product backed by mortgage-backed securities
ExplanationCDOs bundle mortgage-backed securities into complex financial products.
#6
What role did credit rating agencies play in the subprime mortgage crisis?
They overrated the risk of mortgage-backed securities
ExplanationCredit agencies incorrectly assessed the risk of mortgage-backed securities.
#7
What is predatory lending in the context of subprime mortgages?
Lending practices that exploit borrowers with low creditworthiness
ExplanationExploitative lending practices targeting low-credit borrowers.
#8
Which financial institution filed for bankruptcy during the subprime mortgage crisis?
Lehman Brothers
ExplanationLehman Brothers' bankruptcy marked a turning point in the crisis.
#9
What were some consequences of the subprime mortgage crisis?
Global recession
ExplanationThe crisis triggered a worldwide economic downturn.
#10
Which government program was established to help homeowners avoid foreclosure during the subprime mortgage crisis?
Home Affordable Modification Program (HAMP)
ExplanationHAMP aimed to assist homeowners facing foreclosure.
#11
What is the role of the Federal Reserve in addressing the subprime mortgage crisis?
Setting monetary policy to stabilize the economy
ExplanationThe Federal Reserve aimed to stabilize the economy through monetary policy.