What type of security represents a claim on the cash flows from mortgage loans through securitization?

The correct answer is Mortgage-Backed Security (MBS) because it specifically represents a type of asset-backed security that is backed by a pool of mortgage loans. When mortgage loans are bundled together and sold to investors, the cash flows generated from the borrowers' mortgage payments are used to pay the investors. This process allows investors to receive a stream of income based on the collective performance of the underlying mortgage loans.

Mortgage-backed securities are a crucial component of the mortgage market as they facilitate liquidity and funding for mortgage lending. They are typically structured to provide varying degrees of risk and return, and investors can buy into these securities to gain exposure to the real estate market without having to directly invest in properties or manage mortgages themselves.

While asset-backed securities also represent claims on cash flows from underlying assets, MBS is specifically tied to mortgage loans. Equity securities pertain to ownership shares in a company and do not involve cash flows from mortgage loans, while debt securities generally refer to loans made to entities that pay interest but do not specifically relate to real estate mortgage cash flows. Therefore, the specificity of mortgage-backed securities in representing cash flows derived from mortgage loans is what makes it the correct choice.