Question

The 2007 financial crisis was started by risky investments connected to __________ loans.

Answer 1

Answer: Mortgage Loans

Explanation:  The financial crisis in 2007 that produced a  worldwide recession was due to the sudden downturn in the non-conventional  mortgage backed securities market in the U.S.

This downturn was caused by a fall in prices of houses . This put pressure on the mortgage-backed security bond market where  massive numbers of bonds based on non-conventional mortgages were suddenly vulnerable to  default.

Holders of the mortgage-backed security bonds had to raise large amounts of money to cover  the loans they had taken to buy the bonds, thereby creating a liquidity crisis that affected economies globally.