Alabama Real Estate Practice Exam

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Master your Alabama real estate exam with our comprehensive practice test. Tailored feedback, expert tips, and up-to-date questions to ensure your success!

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What is a characteristic of mortgaged-backed securities (MBS)?

Can only be sold by the federal government
Are secured by a single mortgage
Are bundles of mortgages sold as investments
Are exclusively sold in the primary market

The correct answer is: Are bundles of mortgages sold as investments

Mortgage-backed securities (MBS) are bundles of mortgages sold as investments. This means they are composed of multiple mortgages pooled together and investors can purchase a share of the bundle. This diversifies the risk for investors instead of having only a single mortgage to rely on. The other options are incorrect because A) Mortgage-backed securities can be sold by any financial institution, not just the federal government. B) MBS are secured by a pool of mortgages, not just a single mortgage. D) MBS can be sold in both the primary market (when a new security is issued) and the secondary market (when an existing security is bought and sold between investors).