2ndexam_f2011_part2_version1_ans-1 - Name Discussion...

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Name______________________________________________ Discussion Section Instructor____________________________ Note: If you do not include the name of your official TA, you will be deducted 1 point from your exam total Econ 102: Fall 2011 (Eudey) First Exam Version 1 Part 2 The exam is worth 25 points. Please circle your selection in the multiple choice problems, and write your answer in the space provided for the short-answer problems. Each multiple-choice question is worth 1 point. The point-allocation for short-answer questions is indicated at the start of each short-answer problem. No books or notes are allowed during the exam.
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Short Answer: Please write a short answer in the pace provided. 1. (1 point) What is the “security life cycle” for a mortgage-backed security (MBS) that is described in the documentary? Answer: Bank makes a loan for a house => loan then sold by the bank to an investment bank =>bundled into a CDO and sold to investors (1/3 point for each link) 2. (1 point) Explain how a CDO that consists entirely of sub-prime
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2ndexam_f2011_part2_version1_ans-1 - Name Discussion...

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