Secondary market activities include which of the following?

Secondary market activities primarily involve the buying and selling of existing mortgage loans and mortgage-backed securities (MBS). The correct choice, which discusses purchasing mortgage-backed securities, fits perfectly within this framework. In the secondary market, investors, including financial institutions and institutional investors, purchase MBS as a way to manage their investment portfolios or to earn returns based on the cash flows generated from the underlying mortgages.

This activity helps to provide liquidity to the mortgage market, allowing lenders to free up capital so they can originate more loans. Mortgage-backed securities are created when a collection of mortgages is pooled together and then sold as a single security to investors, thus turning illiquid assets (individual loans) into more liquid ones (the securities).

In contrast, activities such as loan origination, underwriting loans, and issuing closing instructions are typically associated with the primary mortgage market. The primary market deals with the initial creation of loans and involves direct transactions between borrowers and lenders, wherein specific processes like underwriting take place to evaluate borrowers' creditworthiness and loan conditions.