SIE Exam Question 786: Answer and Explanation

Question: 786

When an investment company puts home mortgages or other loans into a pool and then sells securities representing shares of the pool, the securities sold are referred to as which of the following?

• A. Asset-backed securities
• B. Dark pools
• C. Derivative-backed securities
• D. Unit investment trusts

Correct Answer: A

Explanation:

When an investment company puts home mortgages or other loans into a pool and then sells securities representing shares of the pool, the securities sold are referred to as asset-backed securities.