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Mortgage-Backed Securities: CNBC Explains

Wednesday, 17 Aug 2011 | 12:00 PM ET

Buying a home is usually the biggest individual investment people make in their lifetime. And more often than not, a mortgage is involved. With such large sums of money in the mortgage market, financial firms profit by using a type financial instrument called mortgage-backed securities, or MBSs. How are mortgage-backed securities created and what purpose do they serve? Salman Khan of the Khan Academy gives a basic explanation of MBSs.