5. A secondary market for mortgages

Which of the following hindered the development of a secondary market for mortgages in the early 20th century? Check all that apply.

Institutional investors avoided dealing with financial instruments backed by the federal government, such as mortgages.

Institutional investors could not assess the default risk of every single mortgage.

Institutional investors were not interested in small non-standardized financial instruments.

It was impossible to turn illiquid assets such as real estate into liquid financial instruments.

Which of the following helped foster the development of a market for collateralized debt obligations (CDOs) and collateralized mortgage obligations (CMOs) in the 2000s? Check all that apply.

Inflows of foreign capital

Development of mathematical models to price CDOs and CMOs

Establishment of the Government National Mortgage Association (Ginnie Mae) and the Federal Home Loan Mortgage Corp (Freddie Mac)

Establishment of the Federal National Mortgage Association (Fannie Mae)