Which of the following two model errors in the RMBS valuation and risk models are considered to have contributed the most to a significant underestimation of
　　systematic risk in subprime RMBS returns during 2008-2009?
　　A. The assumption of future house price appreciation and the assumption of high correlations among regional housing markets.
　　B. The assumption offuture house price declines and the assumption ofhigh correlations among regional housing markets.
　　C. The assumption of future house price appreciation and the assumption of low correlations among regional housing markets.
　　D. The assumption offuture house price declines and the assumption of low correlations among regional housing markets.
　　Answer:C
　　The two model errors considered to have contributed the most to a significant underestimation of systematic risk were (1) the assumption of future house price appreciation, and (2) the assurnption of low correlations among regional housing markets.