During the recent credit crisis, subprime mortgages received pressure From upward movements in interest rates, along with the impossibility for most of these borrowers to refinance. As a result, many subprime borrowers allowed their
　　reduced value homes to be taken over by the Jender. All ofthe following statements describe the effect subprime actions had on mortgage-backed security portfolios except:
　　A. Repayment issues in lower tranches impacted confidence in higher tranches.
　　B. There was a fire sale of securitized debt.
　　C. Panic among MBS investors led to a flight to safer assets.
　　D. The defaults in the lower tranches were high but did not affect senior tranche investors.
　　Answer:D
　　For investors, there was little expectation of portfolio losses in senior tranches. However, when repayment issues surfaced in the riskiest tranches, a lack of confidence spread to holders of more senior tranches. This caused panic among investors and a flight into safer Asets， resulting in a fire sale of securitized debt.