The flat-rate insurance provided by the FDIC has two faults. First, it misprizes risk. Second,

Question 17 options:

1)	it penalizes large thrifts by making them subsidize smaller ones by paying the same rate

2)	it forces conservatively managed thrifts to subsidize those with more risky investments

3)	it is not adjustable to reflect the actual market conditions that are met by commercial financial institutions

4)	the rates are too high to be paid by a thrift without a large number of depositors

A secondary mortgage transaction that occurs when a lender sells mortgages to an agency that, in turn, issues an MRS, such as a pass-through, back to the lender is referred to as a.

Question 18 options:

1)

SWAP

2)

tailor

3)	collateralized mortgage obligation

4)	credit enhancement