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Which of the following most accurately describes market perceptions of problems in subprime mortgages? Subprime mortgage...

Which of the following most accurately describes market perceptions of problems in subprime mortgages?

Subprime mortgage problems were widely recognized by late 2008

Subprime mortgage problems were widely recognized by early 2008

Subprime mortgage problems were widely recognized by early 2007

Subprime mortgage problems were widely recognized by late 2007

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Ans.- Subprime mortgage problems were widely recognized by early 2007.

Subprime borrowers had poor credit histories and are therefore they were more likely to default. Lenders used to charge higher interest rates to these borrowers. So, that makes it too expensive for many subprime borrowers to make monthly payments. As a result, there were many bad loans. These problems were widely recognised by early 2007.

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