Mortgage-Backed Securities and GSE Quiz

The business model of a commercial bank involves being a depository institution that makes loans and offers payment services and savings products. Its sources of revenue include the Net Interest Margin, while its sources of risk consist of credit risk.

Quantitative easing, which involves the Fed buying securities from banks to decrease interest rates and facilitate lending, leads to an increase in loans due to government-guaranteed loans to SMEs and an increase in deposits as uncertainty prompts higher savings.

Mortgage Backed Security (MBS) is a product of securitization of mortgages. It holds significance in the financial industry as it provides a means of investment in mortgages and helps in the process of mortgage securitization.

<p>A unit bank typically operates with a single office for loans and deposits, although it may have some branches. Its potential for expansion lies in its ability to scale operations and services as needed.</p> Signup and view all the answers

<p>The primary functions of an investment bank include underwriting of securities and providing advisory services. Additionally, investment banks are involved in risk management processes.</p> Signup and view all the answers