Transforming Your Paper Into A Presentation Fill in the following speech outline by using your paper as a guide or source of text for this worksheet. Some items will be completed by filling them in word-for-word directly from your paper. Other items will need to be reworded so that they are appropriate for an oral presentation. Presentation Title: Financial Crisis Specific Purpose: Let the novice understand what was happening in 2008 financial crisis Thesis Statement: In this presentation
The concept “credit crunch” was firstly introduced during the Great Depression of the 1990s. It refers to a reduction in the availability of loans and other types of credit at a given interest rate. Under a condition of credit crunch, banks are supposed to hold more capital than other time and become reluctant to lend with a fear of bankruptcies and defaults. In the 1990s, shortage of financial capital and low-quality borrowers forced the banks to reduce the loan supply. But that one of 2007 was
contributing to the European sovereign-debt crisis. The easy availability of credit in U.S, Russian debt crises and Asian financial crises of late 90’s showed the way to a housing construction boom in the USA. The relaxed lending rules and increasing property prices along with the increase in foreign funds added to generate this real estate bubble. There was an increase in housing and credit, mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which was due to the house prices
Marconi (2010) believes that the role played by the institutional investors propagated the financial crises. Institutional investors, which is both, individual or companies do enjoy the benefits of reduced commission preferential regulations. This is due to their large and professional investments. Institutional investors like the mutual funds, pension funds, hedge funds like Magnetar Capital, and Life insurance companies like the AIG and investments trusts contributed to the global financial crises
mortgage backed securities (MBS) and collateralized debt obligations (CDOs) had a strong impact on the events that transpired. In the MBS market, the cash flows from a mortgage is broken up into different parts and then sent to whoever can best handle the different risks at the best price. These parts are then repackaged into new financial instruments which are sold to investors (Rickards, 2012). The new portfolios were used to back collateralized debt obligations (CDOs) which were divided into tranches
been rising since 2006 (Mortgage Bankers Association, 2008). Investors were uncertain how severe the losses would be but it was becoming more likely by the end of the year that a financial crisis was imminent: the amount of subprime and collateralized debt obligation (CDO) losses had surpassed US$120 billion and were expected to increase in 2008 (Gaffen, 2008). As economic conditions turned from bad to worse investors, academics and practitioners began to wonder how such a crisis could have been precipitated
can be easily traded among global investors through a variety of financial institutions” (Coe, Kelly, and Yeung, 2013). Trading mortgages, or shares at the global level proved to be a financial disaster for many involved. Ultimately the collateralized debt obligation market collapsed and thus dragged down the entire global financial market. In order to understand the concept of financialization and the housing market on the global and local level, one must know that there is a global pool of money
The PBS Frontline documentary, Money, Power, and Wall Street gives the audience a little history about the causes of the Great Recession. Frontline some of the major people from Giorogs Papakonstaniou, the Former Greek Financial Minister; Sheila Biar, chair member of the FDIC during the crisis, and Robert Wolf the chairmen of UBS Americans to name a few. The crisis of 2008 not only made about 8 and half million Americans unemployed, but also a loss of about $11 trillion in net worth. On top of
The financial crisis of 2007-8 is considered the worst financial crash since The Great Depression of the 1930s. It began on the 9th of August 2007, with BNP Paribas admitting they had no real way of valuing complex assets, which will be expanded on later. Bloomberg estimated the total cost to the American economy to be $12.8trillion; a difficult figure to calculate considering the crisis affected home values, pensions, corporate earnings, losses in share markets, reduced consumer spending, and of
banks fail because of what is known as Collateralized Debt Obligation (CDO). Centered around these CDOs, the mortgage market fails which generated wealth for many of the characters inside the film. The mess of the CDOs was created by everyone who was involved in this process including homeowners, lenders, central banks, and credit rating agencies. Recently, there seems to be a rise in new CDOs which may lead to the same end. Collateralized Debt Obligations are what banks use to repackage individual
OTHER’S STRENGTH “The Big Short” is an adaptation of Michael Lewis’s best-seller of the same name. The movie narrates a handful of the main players in the creation of the credit-default swap (CDS) market who attempted to bet against the collateralized debt obligation (CDO) bubble and thus ended up obtaining a financial advantage from the global catastrophe of 2007–08. The movie primarily focuses on the eccentric nature of the type of person who bets against the market or goes against the grain. Adam
reduction in risk was a mere This would only happen if the loans in these investments went into default and were not paid off. According to David Paul, president of Fiscal Strategies Group, American International Group issued $450 billion (Paul). Collateralized default swaps became yet another category of investment security that was highly exposed to mortgage-loan risk. In 2010, author Michael Lewis released a novel title, “The Big Short: Inside the Doomsday Machine”. In the novel, Lewis explores
analysis of any risk that is associated with securities of debt. The securities may include corporate bonds, government bonds, municipal bonds, certificate of deposit, collateralized securities (e.g. mortgage backed securities and collateralized debt obligation), and preferred stock. The risks may be determined by taking a likelihood of events to occur, E.g. a local government may fail to come up with timely interest payments of a given debt. Letter grade characterizes these ratings. The safest and
The article “Modern Portfolio Theory, Financial Engineering, and Their Roles in Financial Crises” discusses modern portfolio theory, and the financial engineering. The author mentions roles that modern portfolio theory and financial engineering played in the financial crises. Also, the author states the issue of why elegant mathematics leads to bad polices. In this assignment, I will summarize most of the points that are discussed in the article. The author begins the article by defining the concept
Analysis of the Housing Market Bubble in the 2000s in the context of the Movie “Big Short” For my research topic, I have chosen to analyze collateralized debt obligation (CDO) instruments in the housing mortgage market, the creation of credit default swaps which were shorting instruments against said CDOS and the eventual bursting of the housing market bubble culminating in the financial crisis of 2007-2008. Different hedge funds and the strategies they adopted in order to leverage the situation
banks – which resulted in the incredibly risky leverage ratio for the five major investment banks of nearly 33:1. Between 2001 and 2007, many investment banks borrowed heavily to purchase a greater amount of debt contracts to create and then sell more profitable collateralized debt obligations due to the lack of regulation by the government, a risky move. Also brought up in the documentary as evidence are the congressional hearings that displayed the SEC’s
Classification of Derivatives: Derivatives are classified in terms of their payoffs and as exchange traded and over the counters. • Linear Derivatives: Linear Derivatives have linear payoff. E.g. Futures and forwards. • Non Linear Derivatives: Non Linear Derivatives have non linear payoffs. E.g. Options. • Exchange traded: These are standardized instruments and are backed by clearing house. So there is no default risk. E.g. Futures. • Over the counters: Over the counters are customized contracts
that it incurred during the crisis, if it only realized the strategic position of these companies as American government would have bailed them out if the situation of bankruptcy ever occurred due to the lack of funds when it was time for paying its debts. 2. Sale of the securities at the earliest: JP Morgan followed the herd. JP Morgan only saw the profits that were coming and not the long term losses it was incurring. They should have sold their securities the moment they realized that the market
finally vendors and third parties supporting these bodies. Interconnectedness is a very broad concept. For example, banks which lend or borrow from other banks become interconnected to one another through interbank credit exposures. Contractual obligations amongst financial institutions; such as ownership, loans, derivatives etc. creates interconnectedness among them as well. When firms invest in the same asset, they also become interconnected because of having common exposures to that specific asset
Ethical Dilemma In Business Ethical wrongdoing is a problem in the real world wherein the rules can be bent to manipulate financial standing. In some organizations such as Lehman Brothers, we will take a look at how they were able to alter real information that was damaging to the company in such a way to make it look more secure. Before these things can happen the upper management must discontinue listening to their employees and even punish the ones that speak up about issues in the workplace