History Of The Great Depression

History Of The Great Depression
в… – Introduction
In 2008 the world experienced one of the largest economic crisis, next to the great depression of the 1930's. The meltdown revealed the instability of
the US banking system and led to the bankruptcy of investment firm Leimen brothers, and collapse of worlds largest insurance company AIG, which
triggered a global financial crisis. International share prices tumbled, causing 30 million people to become unemployed and doubling the US debt. It
was the start of a global recession and it was not an accident.
в…Ў – History
After the great depression the US went 40 consecutive years without any financial crisis. All US banks were tightly regulated; investment firms and
banks were privately owned. In investment firms, the ... Show more content on Helpwriting.net ...
The more stocks an investor sold, the higher the bonus or commission. The salaries on wall street tripled. In 1981 president Ronald Regan, supported
by lobbyists and analysts, started a 30 year period of deregulation.
In 1982 the Regan party deregulated savings and loan companies which allowed them to make risky investments with depositors money. In the late
1990's the creation of derivatives occurred, which actually just increased the markets instability.
Derivatives allow brokers to gamble on virtually anything, such as the rise and fall of oil prices. By the late 1990 deviates was a 50 trillion dollar
unregulated market. Now, lenders are no longer at risk if there is a failure to repay. In the new system, lenders issue loans. These loans are then sold to
investment banks. The investment banks compile thousands of different loans together, such as student loans, mortgages and credit payments together
to form complex derivatives called CDO's (Collateralized debt obligations). Investment banks then sell these CDO's to investors. These CDO's are
classified by ratings company on the risk of investing into them. The highest rating is AAA (lowest risk, highly securitized). Investment companies
were rating extremely risky investments as AAA but held no responsibility if the CDO failed, because they claimed that their classification and rating
system was just opinions.
в…ў – Housing Market...
(The graph above displays years 1994–2006,

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The Big Short ' Is A Financial Crisis Movie Directed By...
"The big short" is a financial crisis movie directed by Adam McKay and released in 2015. It bases on a truth story that some smart investors bet
against the United State mortgage market in 2006 to 2008. Michael Burry, an eccentric hedge fund manager, discovered with his own research that the
United State housing market was a bubble about to burst within in a couple years. He started to bet against the United State mortgage backed securities
market by convincing some large banks to create a credit default swap market, which was kind of a bond insurance police, and he invested about $1,3
billion in the credit default swap market. If he was right about the market collapse, his fund would bust up very high and make a hug profit. On the
other hand, his fund would be gone if the market stay stable.
Through Michael Burry's idea and action, the banker Jared Vennett who worked at Deutschebank quickly learned and understood that Burry's
predictions was likely true, and he made himself an opportunity of earning fees on selling those credit default swap to the firms, which the firms could
earn profit when the underlying mortgage bonds fail. He came to Mark Baum office and tried to convince him to buy credit default swaps. His
explanation about the market collapse would being more perpetuated by the packaging of subprime loans into collateralized debt obligations (CDOs).
Through Vennett's convincing, Mark Baum and his associated started to investigate the Miami housing market. He first

Essay on Economy: The Too Big to Fail Problem
"Too Big to fail" was first known in a 1984 Congressional hearing where Congressman Stewart McKinney discussed the Federal Deposit Insurance
Corporation's intervention with Continental IIIinois. The idea interprates that certain financial institutions are so large, if any of them fails, it will
bring an unexpected disastrous effect to the economy. As we all known, the 2008 financial crisis had arose the "too big to fail" problem to the peak
controversial point. Banks, insurance companies, auto companies are part of the big company industry. They make profit by creating and selling
complicated derivatives and trading loans, commodities and stocks. When the big economic environment is prosperous, those big companies make a
competitive... Show more content on Helpwriting.net ...
The Treasury Department purchased $40 billion in AIG preferred shares from its Capital Repurchase Plan. The Fed will purchase $52.5 billion in
mortgage–backed securities. The funds are allowing AIG to retire its credit default swaps." The case of AIG demonstrates a specific illustration of
the "too big to fail" problem. However, after five years of the financial crisis happened in 2008, is the "too big to fail" problem being solved or
controlled? Jim Puzzanghera who published his article on Los Angeles Times insists that banks considered too big to fail are even bigger now.
Puzzanghera provides his opinion based on the data he collected, "Just before the financial crisis hit, Wells Fargo & Co. had $609 billion in assets.
Now it has $1.4 trillion. Bank of America Corp. had $1.7 trillion in assets. That's up to $2.1 trillion." Puzzanghera explores that one main concern of
coming out with a solution to this "too big to fail" problem is that Democrats and Republicans rarely reach an agreement on the problem. Most
Democrats are willing for the federal authority to seize the power and to get rid of the firms if they are too big to fail while most Republicans do not
want to force the banks to shrink. In stead of regulating those big financial firms, "the government's new power to seize large financial firms teetering
near collapse could result in them being rescued instead of shut down, in effect enshrining

Key Factors Affecting The Foreclosure Crisis
Beginning in the late 1990's and accelerating into the early and mid–2000's, mortgage lending became easier. And it became easier for everyone
involved: the borrower, the lender, the guarantor and the investor. The rise of the risk–free, no–down payment, low–documentation loan was not only
born, but metastasized beyond imagination.
Traditionally, the biggest hurdle to home ownership was the down payment. Ever since banks began lending, from the secondary market innovations of
the depression era 1930's and through the 1990's, a down payment was always required. You could not buy a home unless you were willing to first put
up some of your own money. Three factors changed this equation, and when combined this change proved unstoppable: ... Show more content on
Helpwriting.net ...
Investors felt protected because of the credit default swap. The real estate market boomed beyond anything anyone had ever seen. And it fed itself; the
more the market boomed, the more people wanted to buy homes and the more investors were willing to lend.
A case in point: to remain relevant, FHA altered its own rules. FHA loans have always required a down payment and prohibited the seller from
making that down payment on behalf of the buyer. But FHA altered their own rule by allowing the seller to make a "contribution" to a third party
non–profit agency, who would then provide the down payment on behalf of the buyer. And of course, the non–profit would keep a small portion of the
seller's contribution for its work as acting as the "middleman" in the down payment transaction.
When the real estate market became saturated and values began to plateau, there was a rush to the exit. The consumers buying homes turned out to be
speculators who could not afford to make the payments, and they quickly defaulted. As the defaults began, they multiplied exponentially. As the
defaults multiplied, the credit default swaps began to kick in. As the credit default swaps began to pay out, the insurers behind these swaps began to
go suffer. They began to pay out far more than they had ever expected, and far more than they had ever earned. As the investors began to incur losses,
they began to sell their

Derivative Financial Instruments Employed For Risk Management
Derivative Financial Instruments Employed for Risk Management
Credit Risk
Derivatives may be traded either via an exchange (exchange traded) or alternatively, privately negotiated contracts, which are generally alluded to as
Over The Counter (OTC) derivatives. Exchange traded and OTC–cleared derivative contracts have downgraded Macquarie's credit risk as their
counterparty is a clearing house, accountable for the handling of risk management for their members to guarantee that the clearing house has sufficient
resources to carry out its upcoming obligations. Members are instructed to produce initial margins in agreement with the exchange rules in the form of
cash or securities, and further present daily variation margins in cash to cover adjustments in values of the market. Macquarie has exchange traded
derivatives with positive replacement values as at 31 March 2016 of $1,794 million, whereas as at 31 March 2016 of $4,641 million.
For OTC derivative contracts, Macquarie commonly has master netting agreements (usually ISDA Master Agreements) with specific counterparties to
handle and control the credit risk associated. The credit risk connected with positive replacement value contracts is condensed by master netting
arrangements that in an occurrence of default necessitates that balances with a certain counterparty covered by the agreement (for example derivatives
and cash margins) to be discontinued and settled on a net basis. Macquarie frequently executes a Credit

Enterprise Risk Management ( Erm )
Enterprise Risk Management (ERM) is the ability to identify, manage and/or mitigate risks that can affect the overall business operations down to the
day to day operations of an organization (Hampton, J., 2009). The overall Enterprise Risk Management (ERM) entails the utilization of a holistic
model to identify risks that face an organization. ERM is not successful when it is managed in silos. Doing so could lead to the organization not having
a clear understanding of risks and a misunderstanding of their risk appetite. There are many important components involved in the overall ERM
process. Therefore, ERM can be implemented through creating a risk –aware culture, the implementation of the Risk Focused Allocation Framework
(RFRAF) and an operations review which creates and implements a risk strategy for an organization. The overall framework of ERM is dependent on
a risk–aware culture. A strong culture is one in which decisions are made in a disciplined way, taking into account considerations of risk and reward
on an informed basis (Fraser, 2010, pg. 87). Each organization is different and the structure of how it is run, what is important, and what is expected
are all different. The definition of risk "is the potential to lose something worth value" (Risk, 2014). The culture at an organization must be aware of
the risk appetite, allowing managers and other employees to make informed decisions based on the amount of risks the organization is willing to take.
Having a

Dealing With Predatory Home Mortgages
It is no secret that tens of millions of homeowners got into trouble with predatory home mortgages. Tens of millions of them have MERS–originated
Mortgages. If you asked the average mortgagor on the street if they knew what a "MERS–originated Mortgage" was, they couldn't tell you. They don't
know because they weren't told at closing that the "funds" they were receiving to buy their (generally over–appraised) home may NOT have come from
the source named on their Mortgage or Deed of Trust. Instead, the MERSВ® System was used because the borrowers' loans were securitized. This
"system" was created specifically for that purpose (to track the sale and transfer of loans electronically, in a MERSCORP–owned database, with no
regulatory oversight). You can't believe everything you read either. Due diligence is required here.
I do not see either the federal or state governments coming out and educating homeowners on the subject of MERS–originated mortgages and
securitization. Nope. People didn't start finding out about securitization until 2009, just after the foreclosure mess was revealed in the media. Then
there was the bailout. People didn't understand that either. People didn't understand that the banks made some $53–trillion in credit default swap bets. In
2009, even most attorneys looking at the "bigger picture" for the first time didn't know what credit default swaps were. Only the learned on Wall Street
knew what they were and how much money was made.
If you

Mortgage Insurance ( Http )
(http://www–111.aig.com/AIG_Internet/AIG_2014_Annual_Report.pdf)
Mortgage Insurance (http://www.reuters.com/article/2014/07/16/us–bankofamerica–mbs–settlement–idUSKBN0FL1B720140716)
(http://www.propertycasualty360.com/2015/11/03/moodys–warns–of–negative–impact–in–proposed–aig–br )
(life Insurance)http://www.vault.com/company–profiles/insurance/american–general–life–insurance–company/company–overview.aspx, http:/
/www.vault.com/company–profiles/insurance/american–international–group,–inc/company–overview.aspx
Property & Casualty : (http://www.trefis.com/stock/aig/articles/237266/aigs–property–and–casualty–business/2014–04–30#footnote_0_237266 ) (http:/
/marketrealist.com/2015/03/underwriting–profits–property–casualty–insurer/) ... Show more content on Helpwriting.net ...
He suggested to de – conglomerate their insurance company to three single line business consisting of Life Insurance, Property & Casualty and
Mortgage insurance. The financial crisis showed us the iconic and near failure of AIG. Had it not been for the bailout from the Federal Reserve, AIG
would have met the fate of Lehman. It took AIG half a decade to stabilize their share value which had taken a hit. A separation at this point will turn
AIG and its division into rubble.
Introduction :
AIG, one of the biggest insurance company was always considered to be way too much important for the economy 'too big to fail ' by everyone which
is why the Federal Government had to use their bazooka for the bailout. What led the near collapse of AIG is the large amount of Credit default swaps
that they were dealing with. The loan that consumer had taken under mortgage backed security had defaulted. Absence of stringent regulations majorly
led AIG to accumulate huge amount of assets in the form of real estate. In due course of time the real estate was termed as 'toxic ' which was the major
reason that led to the start of 'economic meltdown '. Is AIG really 'too big to fail ' or it is a misconception prevalent in places. Carl

A Research On Risk Management
Risk management is a paramount activity in order to ensure long–term survival in the banking industry. In order to remain as a going concern JPM has
put in place vigorous infrastructure to mitigate and measure risks across the firm.
Such infrastructure includes a risk department overseen by the Firm's Chief Risk Officer (CRO) and an asset–liability committee (ALCO) which
monitors the Firm's balance sheet, liquidity risk and interest rate risk. The primary duties of the CRO as defined by JPM (2014 Annual Report, pg. 110)
are as follows:
Establishing a comprehensive credit risk policy framework
Monitoring and managing credit risk across all portfolio segments, including transaction and line approval
Assigning and managing credit ... Show more content on Helpwriting.net ...
Credit Risk
Define:
Credit risk is defined by JPM as "the risk of loss arising from the default of a customer, client or counterparty (2014 annual report, pg. 110)". This
fairly broad definition encompasses large corporate clients, institutional clients and individual consumers. In addition, JPM identified that the primary
drivers of credit risk arise from (1) residential real estate, (2) credit card, (3) auto loans, (4) business banking and (5) student lending businesses.
In order to further define the characteristics of credit risk, the firm uses methodologies such as (1) a scored exposure rating, and (2) a risk exposure
rating to estimate the likelihood of counterparty default.
Scored Exposure
As securities are underwritten and issued to customers, they are transferred or essentially securitized into a portfolio. Scored exposure is used a term
that encompasses the scored portfolio held in consumer and community banking (CCB). This portfolio predominantly includes residential real estate
loans, credit card loans, certain auto and business banking loans and student loans (i.e., the loans issued by consumer bank Chase, as acquired by
investment bank JPM following the alleviation of the Glass Steagall Act). According to JPM, credit losses on their CCB loans are measured based on
"statistical analysis of credit losses over discrete periods of time and estimated using portfolio modeling, credit scoring, credit scores, and other risk
factors".

The Inside Job
ADMAP
REVIEW OF THE MOVIE – INSIDE JOB
Rohan Rambhia | PGP–10–155
Inside Job is an exemplary recount of how administrator's role when exploited to form risky administrative strategies by means of faulty processes
lead to a crisis of the stature of the recession of 2008. It is a comprehensive documentary which narrates the history of the collapse, not only going into
great, informative depth about the risk–based strategies that put the global economy on the line, but looks back to the rise of the financial industry. The
biggest question which the documentary arouses is that knowing what happened, why are the miscreants not being punished? As the director, Charles
Ferguson, himself stated while receiving the Oscar, "Forgive me, I ... Show more content on Helpwriting.net ...
This resulted in inflated speculation and unethical practices by the nation's leading finance, insurance and credit rating agencies, leading to the 2008
economic collapse. Some of the prominent Wall Street professionals/Academicians in the Bush Government and back to the Wall Street: 2 Hank
Paulson On Wall Street: Goldman Sachs CEO For the government: Secretary of Treasury under George W. Bush Frederic Mishkin For the
government: Mishkin was as a member of the Board of Governors of the Federal Reserve under George Bush. Academia: Professor at the Columbia
Business School and coauthored a report called "Financial Stability in Iceland".
David McCormick On Wall Street: President and CEO at FreeMarkets and President of Ariba, consultant with McKinsey & Company. For the
government: Under Secretary for International Affairs within the United States Department of the Treasury under George W. Bush
3|Page
The Obama era promised to bring in a change and also brought with it a ray of dauntless hope failed to keep the Wall Street executives out of his
Government. In fact most of the very same Wall Street execs–turned–government administrators who pitched the U.S. into multiple financial crises

over multiple decades of unethical practices still hold high ranks in Obama's cabinet. Following chart gives a comprehensive account of the turn of
event:
ADMAP

2.1.3Options. There Are Two Kinds Of Options In The Market,
2.1.3Options
There are two kinds of options in the market, European options and American options. The most common traded one is American options which can
be exercised before maturity in the market. Call options provide the holders the right to buy the underlying assets at an exercise price while put
options is the right to sell (Rad et al., 2015).
Hedgers needs to pay a direct premium when the options open in order to compensate for the speculators. In this case, hedgers have a right to choose
whether they would like to exercise the options at maturity. As to the speculators, they are the writers of theoption and they have no right but obligation
to exercise the option. They receive the premium and take the risk of the probability of ... Show more content on Helpwriting.net ...
Price and position limits is also set here.
2.1.4Swaps
Swap is an agreement that investors exchange cash flows at a specific time in the future. Generally, both parties believe their exchanges are the same
amount of cash flows. The most common swaps are interest rate swap and currency swap. The transaction needs a dealer to realise and dealers get the
profits from transaction cost and the bid–ask spread of the cash flows.
Take interest rate swap as an example, the hedgers may wish to have a certain fixed interest payment for their loans. By contrast, the speculators are
more willing to take a floating interest payment either they have the same amount of loan or not. The dealer combine these two counterparties together
and create the swap for the exchange of fixed interest rate and floating interest rate (Simons &Horward, 2003). To the interest payment data, the hedger
pays the fixed interests to the speculator and received the floating interests according to the dealer. Then they pay the floating interests to the cash
market. In this case, they only pay the fixed interest rate as agreed before and eliminate the risk of interest rate uncertainty. For the speculators, they
pay the floating interests and receive the fixed interests. If the floating interest rate is greater than the fixed one, then they suffer a loss, otherwise they
get the profits.
Generally, individuals and non–banking institutions are able to be the dealer which may cause default

Inside Job 2010 Directed By Charles Ferguson
International business is the most desirable and vital phenomena in today's modern world. Most individuals know that International Business is the
necessity for the prosperity of our world. No one can prosper without performing business internationally. When learning of how other countries
conduct International Business, a company can expand their market to appeal to citizens of these places. However, being as close knit as we are to
other countries, not everyone holds the same values. Every business' goals is to make profit and if one company acts in an unethical matter, that will
create a downfall domino effect. This statement holds truth for the result of the financial/banking crisis that occurred in 2008 because of many errors
that were made unethically and eventually affected many other countries around the world and their living conditions. The documentary Inside Job
2010 directed by Charles Ferguson is without a doubt a very effective film documentary. It did an outstanding job of giving more insight on the
banking crisis in 2008 and how it created a domino effect leading to global recession. In all honesty, this film did not shock me at all in terms of how
corrupt the financial industry in the United States is. What I found humorous in this documentary, were the moments throughout the film where most
of the important questions to be answered followed with the next screen that said "____ declined to be interviewed for this film". However, besides the
partial humor,

Role Of The Baby Boomers Generation Through Time
The "pig in the python" describes the role of the baby boomers generation through time. As the baby boomers creep towards retirement age, a
problem comes in being able to provide retirement services for a large population from a comparatively smaller population of workers. The baby
boomers were a generation that defined America, contributing much to it's growth but in return created plenty of problems that we will deal with for
years to come. Baby boomers grew up in a generation that had high hopes for the future of their country. More people mean't more education, higher
levels of income and thus more buying and spending than any previous generations in history. It was in itself, a generational movement of people who
believed they were... Show more content on Helpwriting.net ...
This effect may last for generations past the baby boomers, as social security benefits rely on taxes, and the large amount of baby boomers have
more ability than anyone to deplete these resources for future generations. Improvements in medicine will surely increase how long the average
person lives, and it will take an increasing amount of money to anticipate these changes. At the same time, the older a person lives, the more risk
they are to needing assistance from other publicly funded services such as caretakers, and also to provide them with the medicine they need to get by.
The financial collapse is a very complex issue rooted in multiple causes, making it hard to put into a single sentence. However at it's core the reason
for the collapse is that many investors and banks tried to get rich by taking on assumptions about the housing market and taking on huge risks that they
didn't realize the full extent of. The beginning of the crisis is rooted in banks giving out subprime loans to people who would have not otherwise been
given these loans. The banks assumed that these loans could be bundled and the numbers proved that they were safe investments, because enough
people would pay their loans back. Another assumption that people held was that, because the housing market had a history of continual rise, that
history would repeat itself and the value of housing would always rise. The Efficient–Market hypothesis seemed to claim that economic bubbles are not

The Financial Meltdown Of 2008
The Lehman Brothers scandal is what many consider to be the catalyst that started the financial meltdown of 2008. This paper is meant to look at
what took place during the start of the meltdown and what caused Lehman to fail. Who was involved? What caused one of the largest banking
institutions in history to fail? What could have been done differently? These are a few of the questions I'd like to address in the next few pages. In
the Fall of 2008 things were starting to look bad for Lehman Brothers. Much of their investments were in the housing market which was beginning to
fall, and fall hard. On Friday September 12, Hank Paulson the US Treasury Secretary under President George W. Bush, flew to New York for a
meeting regarding ... Show more content on Helpwriting.net ...
Fulds goals were essentially to "overtake rivals" like Goldman or Merrill who had been in the game for a long time, using borrowed money was his
solution to this. In 1994, right around when Dick Fulds was appointed CEO, Lehman shares were valued at $4/share, by 2007 at Lehman 's peak,
shares were valued at a staggering $84/share. This massive growth was primarily attributed to Lehman's expansion into other more complex
investments, including credit default swaps. As defined by Investopedia, "A credit default swap is a particular type of swap designed to transfer the
credit exposure of fixed income products between two or more parties. In a credit default swap, the buyer of the swap makes payments to the swap's
seller up until the maturity date of a contract. In return, the seller agrees that, in the event that the debt issuer defaults or experiences another credit
event, the seller will pay the buyer the security's premium as well all interest payments that would have been paid between that time and the security's
maturity date." At the time this was seen as a normal practice, but firms began to speculate with these swaps and this is what ultimately caused many
large financial firms like AIG to collapse. Risk was the name of the game and was how Lehman began to operate under Fuld. It was believed that the
firms creating these complicated risky investments were distributing risk wide

Essay on The Financial Crisis and UK Bank Scandals
The Financial Crisis and UK Bank Scandals
In September 2007 the UK banking industry began exhibiting symptoms of the financial crisis that started in America in 2006. Northern Rock was in
trouble and had to ask the Bank of England for help. When news of this got out customers started queuing around the block to withdraw their money. In
2008 Northern Rock was nationalised, and in 2012 it was bought by Virgin Money.
Today the banking industry can be seen to be on the road to recovery. But on that road there have been potholes of controversy. I'm thinking Libor,
excessive bonuses, payment protection mis–selling and foreign exchange manipulation, to name a few.
But before we look at those in a bit more detail, let's quickly recap on the ... Show more content on Helpwriting.net ...
The sellers of these swaps then covered themselves against the risk of the swap they'd just sold by buying yet another credit default swap. It was
getting complex. When mortgage defaults caused a drop in the value of collateralized mortgage obligations, the credit default swaps had to pay up, and
banks started seeing significant losses. The reduced liquidity led to a freeze in trading of CMO's, then the banks stopped lending to each other altogether.
Enter Northern Rock, who needed this short term lending to maintain business as usual. We know what happened to them subsequently. Banks all over
the world were suffering losses by this stage, and headlines were made when US bank Bear Stearns had to go to the Federal Reserve for funding. They
were taken over by JP Morgan shortly afterwards. Then the floodgates opened, with the bankruptcy of Lehman Brothers in 2008 prompting a
consolidation of banks (Lloyds bought HBOS, Bank of America bought Merrill Lynch). The whole financial system was under such a strain at this
point that government intervention was required.
The UK government propped up Lloyds/HBOS and RBS with around ВЈ37 billion of taxpayer's money. Interest rates were cut from 5% in September
2008, and by March 2009 they were at 0.5%. At the same time guarantees were given to savers that their deposits up to ВЈ50,000 would be covered
(now ВЈ85,000). In 2009 further government support was needed, and according to The

The Economic Crisis ( 2008-2009 )
The Economic Crisis (2008–2009) There are numerous things that created the economic crisis among the year of 2008–2009, which was really late and
in view of it we and presumably will never be totally recuperated from it. The main reason that it happened was because millions of Americans couldn't
pay anything off, causing disaster which will affect us Americans for the rest of our lives. The American economy is based on utilization and
consumerism. It began in 2007 when the home loan emergency started causing home costs to increase it created chaos. The critical parts were gluttony
and misrepresentation. Some of the financial emergency reasons incorporate credit default swaps deals were leveraged, government intercession,
subprime home loans, and market insecurity. Government Intervention In the monetary administrations part, government bailouts and corporate
mergers resulted because of the "poisonous advances" on the accounting reports of numerous budgetary foundations. Stock costs and actually, the
estimations of most securities plunged in light of vulnerability in the money related markets. Numerous individuals experienced enormous misfortunes
in their 401(k) arrangements and different ventures and feeling the sting of these misfortunes and apprehension about the stock exchange diminished
their using. This brought about an enormous decrease in buyer using, especially among the final quarter of 2008. The terrible residential item GDP of
the U.S. contracted

The Pros And Cons Of Globalization
To the average global citizen, the scope of globalization and its influence is glaringly obvious. You notice it in the variety of foods at your local
grocery store, the ease at which you are able to communicate with your friends over the internet, the speed at which products from online shopping
reach your home, and just about everywhere else. In an economic sense, its existence is a bit more elusive to the untrained eye– though certainly not
any less present (on the contrary, the evolution of what is known as the global economy is arguably the most significant product of modern
globalization). That is to say, the economic implications don't paint as happy a picture as some of the more favorable facets of globalization, which is
generally thought to be a positive thing (at least from the privileged point–of–view of a Global Northerner). To the trained eye, by contrast, the ugly
face of globalization is much more apparent, and being educated in the matter strengthens one's ability to understand and process specific examples of
this; and there is no shortage of unpleasant examples to choose from: one of the most famous being the stock market crash of 2008. The Big Short is a
film that narrates different group of people's involvement in the 2008 global financial crisis– or more accurately, the United States housing market crash
that is thought to have caused it. Michael Burry is a hedge fund manager who, after some extensive research, finds out that the housing market is

Deregulation Is The Underlying Cause Of The 2007 / 08...
Deregulation is a process that removing or reducing the regulations and allowing banks to invest (MBA lib, 2015). It allows banks to collaborate, and
there's no regulations of derivatives. The Financial crisis in 2007–2008 brought the massive hurt to everyone in the world. The worldwide financial
problem affected thirty million people loosing their jobs and cause many countries getting close to go bankrupt (Peah, 2014). This is the global issue
that everyone should be consider of. The purpose of this essay is to determine if the deregulation was the underlying cause of the 2007/08 financial
crisis. The essay argues the deregulation was the underlying cause of the 2007/08 financial crisis in the US, because of it causes financial innovations
with no regulations, subprime mortgages increasing and lead quite a few competitions among banks. I will discuss these three parts in the following
essay. Firstly, I would focus on how deregulation causes more and more financial innovations be made and how they resulted the financial crisis. Then I
will argue that deregulation leads to the numbers of subprime mortgages increased in the market. Due to deregulation the subprime mortgages markets
started to lose control, the market failed and caused the financial crisis in 2007/08. Finally, I will state deregulation causes banks began multiple
competitions among them and raised the amount of subprime mortgages thus the financial crisis occurred. Deregulation, as the beginning of the essay

The Stock Market Of The United States
The stock market in the United States is run so anyone can view the trades, their values and no information is hidden. Compared to the stock market,
the bond market is run behind closed doors causing problems in the economy. The difference between the two markets became more understood during
the Great Recession. When the unethical ways of individuals in the selling of bonds caused corruption that contributed to the recession, many people
were hit by the repercussions of the selfish actions. Selling the bonds to people who weren 't in good financial situations became a normal action which
cheated many individuals out of money. Thebond market would be better off being transparent parallel to the stock market because less people would
... Show more content on Helpwriting.net ...
While he knew what he was doing to earn money, not many other people did. His strategies to work the market in the way that he did was
disreputable. He used the possibility of failure of other people to further himself financially. Morgan chose AIG's Cassano to sell the bonds because he
worked for "a triple–A–rated company willing to sell them" (Lewis, 70). The triple–A–rated company could sell the triple–A–rated bonds, which were
really triple–b–rated bonds grouped together to appear as a better rating, even though the group was just a bunch of poorly rated bonds all together.
When the bonds would be sold, no knowledge of the terrible ratings had to be disclosed. If the bond market had more regulations as to what had to be
revealed, these companies wouldn 't have had the chance to bankrupt many people and have so many people default their payments due to the awful
loans the banks were providing. AIG was selling the packaged credit default swaps (CDS) left and right. Banks and hedge funds were buying them
from not only AIG but other banks and hedge funds who would package them again and sell them over and over. AIG was the only firm that was not
buying the packaged loans, only selling them. These people who were selling the packaged CDS' didn 't know the damage they were doing to
themselves and others. They were selling bonds to people who they knew would default, which gave them worst

The Doomsday Machine
The Big Short– Inside the Doomsday Machine was a very informative and interesting book written by Michael Lewis. This book was written about
the genius foresight that a group of people had about the market at the time. The market that these men decided to researched and ultimately bet
against was the housing market. Due to a lack of regulations this market was not stable and due to greed and other factors such as negligence this
market ultimately crashed. This market took many years and poor judgment on the part of many to reach the situation it did and the subsequent
crash of 2008 had world wide effects. I believe that the book was able to provide a great view into this financial world and was able to explain how
something terrible like this was able to occur. The book looks into the lives of a few people who were not your typical investors or money managers
and did what many people of the time neglected to do was to read the bond prospectuses and project where the market was headed. These group of
financial investors were able to sort through the tranches and truly evaluate the bonds for what they actually were. From this part of the book I learned
not only... Show more content on Helpwriting.net ...
In the case of the housing market collapse, all this accumulated debt had to be covered by the government to cover the banks which were determined
to be "to big to fail". After it was all said and done the people who put the market in this situation walked away with a huge bonus. This debt is now
passed onto the general population again to repay for generations to come. History is said to repeat itself and new policies can be yet again put into
place to make this situation possible. This is because Wall Street is driven by greed and they will do whatever they can to make a profit for themselves
and their companies without any remorse for what they do obtaining

Michael Lewis The Big Short: Inside The Doomsday Machine
INTRODUCTION
The capitalist and the not capitalism or communism are the 2 types of economic system. The capitalist is a free market that gives a freedom to people
to be wealthier without any help, however, the noncapitalist is a government rule the people and people don't have freedom. To be successful in life
people should take a risk by betting or investing mortgages, investments, funds, or other products. The non–fiction book name The Big Short: Inside the
Doomsday Machine is written by Michael Lewis is about the subprime of mortgage and bond, and the work o f people like, Bear Stearns, Deutsche
bank and Steve Eisman of front point partner believes that the housing bubble will be break apart and the wall will be in debt. However, the ... Show
more content on Helpwriting.net ...
If individuals or countries are left unrestricted to pursue their own self–interest that will have an incentive to specialize to comparative advantage thus
making themselves and other better off. More commonly it referred as the advantage of a policy of Laisse Faire, benefits of a free market, allowing
the unrestricted exchange, and it is a capitalist market–based solution. The government leaves people free to choose and it is the best for economic
policy of wealth creation because are unrestricted so that they can create more money and become rich. It describes to The Big Short: Inside the
Doomsday Machine book because the author writes about capitalist economic which is free market and people can be rich on their own without any
political power to help people and it gives an example of people who were free and became wealthy. In fact, the policy or system which increases the
wealth is because of a do–nothing policy rule. This policy also referred to as a free market policy, capitalism, and letting the market to operate. Also, the
do–nothing policy is capitalism and has two ways to get people to comparative advantage and exchange. First leaving people free to pursue their
self–interest as they define it maximum freedom, which leaves people alone, not influences people's values and does not try to help people what is
good or bad they choose so it will lead to specialization according to comparative advantage and exchange. Finally, the united states political system is
uniquely configuring to favor of the "Do–Nothing Policy" and this is why the united states excel at wealth creation and equality. Also, the Big Short is
the story of how in a free market capitalist system people become rich by taking an in their

Notes On Credit Default Swaps
Credit Default Swaps
Another financial vehicle that could be problematic was CDS (credit default swap). CDS is a financial derivative works like insurance on securities.
The underwriter is obligated to pay a pre–determined fee to counterparty if a certain security default. In return, underwriters charge a fee as
compensation. CDS can be used to hedge against risks. However there are still some difference between a CDS and an insurance contract.
The CDS does not require buyers to actually hold underlying assets. That means a third party can "insure" against default risk that it would not bear the
consequence at the first place. A financial institution can act like an insurance company by selling CDSs.American International Group (AIG) was the
largest CDS underwriter during the crisis. AIG issued tons of CDSs because historical default rate on bonds were so low that issuing CDS became a
cash generator. They simply collected the premium and never though of paying out anything until the crisis hit.
Another thing that CDS is different from the insurance is that an insurance pool can be much better diversified. For example, a car crash in Los
Angeles will not increase the risk of another car crash in New York since two events of car crash are not correlated to each other. However, as
mentioned before, when the house price bubble popped, the events of defaulting on mortgage can have high correlations. When millions of mortgages
defaulted one after another, the institutes had

Credit Default Swap
Credit default swap
In 2008, the financial crisis hit, which resulted some large financial institution faced the threat of collapse as well as downturns in stock markets
around the world. The credit default swap plays a significant role in the financial crisis, especially the failure of AIG.
Credit default swap (CDS )is a financial instrument that is designed to trade credit risk that a reference entity has credit events, and it is a credit
derivate that is traded over–the–count. There are two sides in a CDS contract –the buyer and the seller. Generally, the buyer needs to pay a periodical
premium to the seller , and in return, if the credit events occur, the seller pay the compensation to the buyer. The credit events refer to defaults of
corporations or debts. The credit default swap was introduced in 1994 and started to be prevalent from 2001. According to the ISDA Market Survey (
2010 ), at the end of 2007, the CDS market size had increased to 62 trillion from 919 billion in 2001.
I. The risk of CDS
CDS a type of credit risk management tool, but it also introduces another dimension of risk–the counterparty risk and systemic risk of the market (
Deutsche Bank Research 2009). The counterparty risk is the risk coming from the default of a counterparty in the CDS. For example, if the reference
entity has the credit events, the buyer can get a payment from the seller. However, if the payment is too large or the seller already has

Great Depression 2008 Essay
History has shown us again, and again that when power is left unchecked it becomes corrupt and out of control, that is the iron law of oligarchy. In
the US we saw this happen recently in the 2008 economic meltdown. The banks and corporations should never have been aloud to become "to big to
fail," and once they did grow to a point when they were there should have been more government oversight to make sure things did not get out of hand.
After the great depression laws were put in place to try to prevent something like that from ever happening again, but we undid those restrictions and
ended up in a place eerily similar to somewhere we had been before. In this paper I will cover a brief history of the great depression, and show how
the situation in 2008 was all too similar. I will also discuss and analyze the factors that brought us to the tipping point in our most recent economic
scare. And finally I will explain why the actions taken by the FED were necessary and kept us from an even more ... Show more content on
Helpwriting.net ...
But depressions are different, they also come around every now and again but when they come they have the capability of toppling giants. If a huge
company with thousands of employees and ties to other large companies goes down it can easily destroy the whole system and ruin the American
economy along with the economies of many other nations. It is clear that these companies failing can cause immense damage to an economy but it
is not clear what causes these companies to fail in the first place. Back in the depression it was fear and oversight that caused the banks to fail and in
2008 it was the same lack of oversight that allowed things to get so out of hand that the economy was on the brink of total collapse. Luckily we
learned from our mistakes in the past and the right steps were taken to keep the economy on its

The Effects Of Exposure Levels On The Group 's Exposure
Scenario Analysis is the same as stress testing which capture the Group's exposure to unlikely but plausible events. Many different scenarios are run, in
order to account for significant movements in credit spreads, interest rates, commodity prices, and exchange rates.
Citi performs stress testing on a regular basis to estimate the impact of extreme market movements. It is performed on individual positions and trading
portfolios, as well as in aggregate inclusive of multiple trading portfolios. Citi's independent market risk management organization, after consultations
with the businesses, develops both systemic and specific stress scenarios, reviews the output of periodic stress testing exercises, and uses the
information to assess the ongoing appropriateness of exposure levels and limits.
FACTOR SENSITIVITY
Factor sensitivities are defined as the change in market factors affecting a current position, like the Treasury, by a single basis point. Citi practices
calculating, monitoring and limiting all factor sensitivities across their entire material risk portfolio. Essentially, the factor sensitivities take the single
basis point exposure and ensure that these levels are monitored across the firm. This appears to be a manual process of which requires a large amount
of time to keep up with. I also question the usefulness of such a calculation.
In addition, the firm claims that these measurements are used to assess the amount of interest rate swaps that must be

Questions On Mortgage Backed Securities And Credit Default...
Mortgage backed securities and credit default swaps are words we often hear in reference to the Great Recession of 2008. In this paper, I will be
discussing and analyzing an analogy Tim Harford uses to discuss the probability of buying a carton of eggs with an egg having a double–yolk to what
mortgage–backed securities and credit–default swaps meant and represented. In chapter 6 of the updated book, The Undercover Economist, a lady
named Fiona Exon is mentioned. In early 2010 she bought half a dozen eggs and discovered all 6 of them had double yolks. According to the
British Egg Information Service the chance of any given egg having two yolks is one in a thousand and for each one of the 6 eggs you keep
multiplying this probability and get a probability of one in a quintillion (thousand raised to the power of 18). This was reported to the media and
surprisingly more people called in to report discoveries of half a dozen double yolk eggs. This event that was known to be very rare was not really
that rare. The calculation, in reality, was wrong as they had made a wrong assumption that eggs with double yolks only come in clusters, increasing
the chance of seeing 6 double yolk eggs by a million billion fold with this simple assumption. So knowing that there was a really high probability of
ending up with half a dozens of double yolk eggs, Fiona Exon's friendly local egg retailer came up with a clever marketing wheeze and offered a
million–pound jackpot to any customer who

Planning And Preparation Of A Great Plan
Introduction
In business as in life there is nothing that is definite. One would have a great plan and the will to accomplish that plan but what if all the planning and
preparation came to not because one had forgotten to allow for one thing. Is there anything that one can do to mitigate or eliminate the one thing that
one did not see when the plan was laid out? All the best mad plans all the anticipating and scrupulous planning one is bound to miss something that
could potentially shot down ones plan. What can one do to protect one's plans and dreams? The overwhelming answer is insurance (Sundstrom,
Gendler, & Writers, 1994).
One might say that if you planned well enough, that one would not leave anything to chance and would have a ... Show more content on Helpwriting.net
...
This protocol of most business and organizations normally has some way to protect the whole plan from going under because of one thing not being
covered at the conception of the entire plan. This protocol most likely includes insurance as the catch all for things that might have been over looked at
the initiation of the plans (Sundstrom, Gendler & Writers, 1994).
There is no single definition of insurance. In the course textbook by (Rejda, 2012), insurance can be defined from the viewpoint of several disciplines,
including law, economics, history, actuarial science,risk theory, and sociology. But each possible definition will not be examined at this point. Instead,
we will examine the common elements that are typically present in any insurance plan. However, before proceeding, a working definition of insurance
one that captures the essential characteristics of a true insurance plan must be established. After careful study, the Commission on Insurance
Terminology of the American Risk and Insurance Association has defined insurance as follows. Insurance is the pooling of fortuitous losses by
transfer of such risks to insurers, who agree to indemnify insurances for such losses, to provide other pecuniary benefits on their occurrence, or to
render services connected with the risk. Case Analysis
Our course makes reference to many variations of the definition of insurance. This analysis

Corporate Credit And Risk Management
On the other hand, Lloyd Blankfein, the CEO of Goldman Sachs, prefers to describe credit default swaps in terms of "risk management." He says,
"Because we had this risk, because we were accumulating positions...we have to go out ourselves and provide and source the other side of the
transactions, so that we can manage our risk." Although, that is simply a technical way of stating that they need to get even action on both sides of
the bet, just like a bookmaker; but, on Wall Street they are known as "market makers." Luckily, there are some on Capitol Hill who are willing to
address these similarities. "You all are the house, you're the bookie. (Your clients) are booking their bets with you. I don't know why we need to dress
it up. It's a... Show more content on Helpwriting.net ...
If he can't do it, how does any investor reasonably think they can do otherwise?
With all that said, derivatives are not inherently dangerous with the proper conditions in place as many non–financial companies buy derivatives in a
responsible manner as a hedge for their business expenses. For example, an airline can hedge against rising oil prices or a multinational manufacturing
corporation might hedge against a currency change with derivatives. In these instances, derivatives actually reduce systemic risk. In fact, even Warren
Buffett uses them to some degree. However, it's a potentially disastrous situation when Wall Street goes far beyond simply hedging risk and that is
exactly what has happened. Moral hazard has ensued as the major banks don't have an incentive to hedge their bets conservatively because they've been
branded "too big to fail." Thus, the unregulated credit default swap market alone had grown to $42.6 trillion by 2007, roughly the household wealth of
the U.S. It's very easy to see that even a slight fluctuation in a market of that size can have dire consequences.
Unfortunately, the real estate market collapsed, and then the financial system, due to a few underlying circumstances. Many people bought homes
that were priced well beyond their means. They were able to do so because several mortgage lending companies enabled them with a wink and a
nudge via various types of disreputable loans, such as "liar loans." A liar

Aig and the Financial Crisis
AIG and the Financial Crisis In 2008 United States of America suffered a massive financial crisis. The entire economy was affected, and a lot
companies were forced into bankruptcy. AIG was on the verge of being bankrupt until the government decided to bailout the company. Now the AIG
is being controlled by the government to restructure and recover assets. According to Kathy Gill about 80 percent of the AIG is controlled by the
government (Gill). There are many reasons that lead to the fall of one of the largest insurance company in America, but the four that stand out the most
are leverage provided by the government, the creation of Collateral Debt Obligations (CDO), the use of Credit Default Swaps (CDS), the arrogance to
believe nothing... Show more content on Helpwriting.net ...
Companies got to greedy and started to make CDO's out of Subprime mortgages instead of prime mortgages. The difference between prime
mortgage and subprime mortgage is the risk involved. Subprime mortgages are the riskier security, and when the companies couldn't find any
prime mortgage they turned to the subprime mortgages. This greed lead to the fall of AIG, because of the risky CDO's that AIG was involved
with. Since the CDO's defaulted AIG had to provide companies money for the insurance they guaranteed on those CDO's. With tons of these
CDO's failing all the companies started to perform poorly too, and eventually the financial crisis had started to take a toll on the economy. How
did Credit Default Swaps work? The insurance that AIG provided was one of the main problems that lead to the company's destruction. Credit
Default Swaps (CDS's) were insurances for the CDO's that other companies owned. It's humorous when looking at the description of Credit
Default Swaps (CDS's) because it does not make sense since it means insurance for the debt you own. CDS's were created by a group of bankers from
JP Morgan in 1994 on a trip to Florida (Philips). They were trying to come up with a plan where they can lessen the risk for the loans they give out.
According to Matthew Phillips JP Morgan ... "built up a "swaps" desk in mid–90s and hired young math and science grads from schools like MIT and
Cambridge to create a market for a complex instrument. (Philips)"

2007-2008 Financial Crisis
The Global Financial Crisis of 2007–2008
The Global Financial Crisis 2007–2008 Economists and scholars spend years dissecting financial markets and evaluating the causes of booms and
busts. Throughout United States history there have been multiple economic booms that were underestimated and followed by recessions. In the
situation of the 2007–2008 global financial crisis many culprits have been identified as causes, such as loose monetary policy, credit booms,
deregulation, over complexity, and greed. Since the economic boom was solely dependent on weak policies and misconceptions, this leads me to
believe prevention was possible with adequate regulatory policy, risk assessment and clarifications for commercial banks.
Monetary ... Show more content on Helpwriting.net ...
Generally homeowners were required to meet certain qualifications in order to borrow funds for mortgages, also known as prime mortgages. Since the
prime mortgage market had receded, lenders were encouraged to lower their requirements for lending and began to allow subprime mortgages. These
less responsible homeowners began to default on their mortgages, which turned investment bankers' stream of mortgage payments into empty houses.
Increases in foreclosures raise the supply of available houses, which lowers the fair market values of houses. The prime mortgage homeowners were left
with houses that were highly devalued relative to their mortgages and began to abandon their mortgage obligations. Mortgage lenders, investment
bankers, and outside investors froze their activities, as they faced possible bankruptcy.
Regulatory/Supervisory Inadequacies Deregulation is believed to be the underlying cause of all economic downturns, as its scope of responsibility
reaches all markets. In the 1930s the United States experienced a bank crisis that sparked a widespread distrust in the banking system and people
withdrew their money from the depository institutions overnight. The sudden retraction of the money supply from the economy caused many banks to
close and the economy to suffer. The Banking Act of 1933, also known as the Glass–Steagall Act, was created to insure depositors'

Global Financial Crisis And Its Impact On Economic Policy...
Financialisation is the process in which financial institutions/markets increase in size and gain greater influence over economic policy and
outcomes (Palley, 2007).Another link to financialisation is high degree of leverage. This is because with leverage, you can get a loan for 9/10s
of the money, so you only need a small portion, and you are able to make lots of profit. Leverage is linked to financialisation in a sense that if it
works, you get lots of profit with a working system, however if it doesn't work, then you can lose lots of money, and in high degrees of leverage,
you can be losing lots of money by the investment not working out, and someone then has to pay off the loaned money. In this essay, I will be
analysing whether or not financialisation was the main cause of the 2008 global financial crisis, or if there were other factors involved in the great
recession. I will be arguing that financialisation was a cause of the crash, but because it was aided by other factors, it is not the sole reason behind
the collapse. The points that I will be making in my argument will be in relation to the financial crisis in the context of financialisation, talking about
market deregulation and subprime mortgages. The second point that I will make will be about the greed of the CEOs on Wall Street, and their
irresponsibility when it comes to the money of others. The final point that I will be making will be about the irresponsibility on behalf of the
regulators, and how they

The Use of Money Market Funds as Collateral
Table of Contents
List of Figuresiii
List of Tablesiv
List of Abbreviationv
Abstractvii
1Introduction1
2The Money Market3
2.1General Description of the Money Market and its Instruments3
2.2Participants and their Main Activities4
2.3Trading, Clearing and Settlement6
2.4Risks and Risk Mitigation7
3Collateral Management9
3.1General Description of the Collateral Management Function9
3.2Quality and Risks of Collateral10

3.3Transaction, Execution and Legal Issues11
3.4Valuation of Collateral13
3.5Users and Trends14
4The Role of Collateral in OTC Derivative Transactions16
4.1General Description of OTC Derivatives16
4.1.1Structure and ... Show more content on Helpwriting.net ...
Recent market developments have highlighted the 'Flight for Security ' of market participants by means of financial collateral. While cash represents
the preferred source of collateral in 82% of all OTC derivatives transactions, it needs to be returned with interest to the collateral giver. At the same
time this creates a re–investment risk for the collateral receiver. When accepting MMFs as collateral, collateral receivers are not exposed to any
reinvestment risk because the fund offers competitive rates of returns. Compared to their

Money Monster Movie Analysis
Jaria Jalloh
Student ID:214951206
TA: Rana
Film Review
The two movies I decided to do a film review on was Money Monster and The Big Short. Money Monster released on May 13th, 2016 was directed by
Jodie Foster an award winning American actress () . Foster has been a successful actress ever since she was young,at age 12 she received an Oscar
nomination for the film Taxi driver eventually leading to her winning a Golden Globe and being named as one of the best actresses of her
generation(). The movie Money Monster is about a frustrated investor by the name of Kyle Budwell who lost $60,000,as a result of investing in a
company called IBIS. The company had an unexpected glitch to the system during a trading algorithm, which led to a loss of $800 million for IBIS
investors. Due to the unexpected financial loss Kyle faces he decides to make an unexpected ... Show more content on Helpwriting.net ...
The two films made me constantly wonder and question why people work and what people work for, if inequality is so prominent due to the lack of
discipline in bosses. Note that inequality is one of the largest problems in our world and can result into crisis.An example of inequality in the
workface is shown in both films when Gamby the CEO from Money Monster and _______ from The Big Short decide to take advantage of investors
,in order to make a substantial amount of profit. This particular scene reminded me of the rich canadian companies that made profits over $200
million in 2006. CEOs of these companies salary in a day would total what a full time minimum wage worker made in a year. In The Big Short as a
result of inequality a financial crisis occurs seen through the collapse of the US economy . Whereas in Monster Money investors are faced with a job
crisis since the IBIS company is put under scrutiny and $800 million of investors money is

Master Thesis On Finance And Investments
Master Thesis Topics
Finance & Investments
2009–2010
Table of Contents
Master Thesis topic 1: The Design of Lockup Contracts in IPO Firms in Europe4 Master Thesis topic 2: Bank Risk Management6 Master Thesis
topic 3: The Ambiguous Role of Credit Ratings8 Master Thesis topic 4: Mergers and Acquisitions9 Master Thesis topic 5: Trading Volume and
Asset Prices10 Master Thesis topic 6: Liquidity in Asset Markets11 Master Thesis topic 7: The Role of Corporate Governance in Mergers and
Acquisitions13 Master Thesis topic 8: The Risk of Corporate Fraud and Capital Market Consequences15 Master Thesis topic 9: Credit Derivatives16
Master Thesis topic 10: Bank–Borrower Relationships17 Master Thesis topic 11: The Impact of... Show more content on Helpwriting.net ...
As directors assume important leadership roles and they are more informed than other shareholders, thus the information asymmetry tends to be higher
between directors and outside investors than between venture capitalists and outside investors. However, venture capitalists are repeat investors who
have valuable reputation at stake which may limit their conflict of interests with outside investors acquiring shares in the IPO. Outside investors may
not purchase shares in the IPO backed by venture capitalists who were previously involved in taking advantage of insider information and reducing the
wealth of outsider investors. Besides venture capitalists also use IPO as an exit mechanism to optimally recycle investments and maximize future
returns. Hence the length and expiry of directors' lockup agreements will convey significantly different information than the length and expiry of
venture capitalists' lockup agreements.
Important Literatures
Aggarwal, R., Krigman, L. and Womack, K., 2002, "Strategic IPO Underpricing, Information Momentum, and Lockup Expiration Selling". Journal of
Financial Economics 66, 105 – 137.
Brav, A. and Gompers, P., 2003, "The Role of Lockups in Initial Public Offerings". The Review of Financial Studies 16, 1– 29.

Cornell, B. and Sirri, E., 1992, "The Reaction of Investors and Stock Prices to Insider Trading". The Journal of Finance 47, 1031 – 1059.
Field, L. and Hanka, G., 2001, "The Expiration of IPO Share Lockups". The Journal of

Contagion And The Subprime Crisis
Outline essay: –Subprime crisis: causes and historical perspective –Contagion and the subprime crisis –The case of Lehman Brothers Contagion and
the subprime crisis: The literature identifies multiple mechanisms of contagion which were possible explanations for the global spread of the subprime
crisis. Longstaff (2008) elaborates on three of these mechanisms and finds empirical support for two of these mechanism's roles in the subprime crisis.
First of all, the information correlation view argues that contagion occurs as economic news representing negative shocks in one market, affect values
of securities in another less liquid market or market with lower price–discovery. The second mechanism is liquidity induced contagion that occurs
through a liquidity shock affecting all markets. As investors suffering losses in one market have difficulty acquiring funding, this results in a
downward spiral of overall liquidity. Thirdly, the risk premium view of contagion argues that severe negative shocks in one market may lead to an...
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It is argued that in the case of the subprime crisis, transmission occurred through direct linkages (Reinhart and Rogoff 240). These direct linkages were
first of all, the "nontrivial" exposure of non–US financial institutions to the US subprime mortgage market. Secondly, there were common
characteristics in various countries at the start of the crisis. Two important ones being real estate bubbles in many European countries, and large current
account deficits in numerous countries as varied as Bulgaria, Iceland, Ireland, Latvia, New Zealand, Spain and the United Kingdom (Reinhart and
Rogoff 244). Thirdly, various countries were not only exposed to the US subprime market, but also had common lenders with US financial institutions
(Reinhart and Rogoff

The Aig Bailout
The AIG Bailout William K. Sjostrom, Jr.в€
— Abstract On February 28, 2008, American International Group, Inc., the then largest insurance
company in the United States, announced 2007 earnings of $6.20 billion or $2.39 per share. Its stock closed that day at $50.15 per share. Less than
seven months later, however, AIG was on the verge of bankruptcy and had to be rescued by the United States government through an $85 billion loan.
Government aid has since grown to $182.5 billion, and AIG's stock recently traded at less than $1.00 per share. The Article explains why AIG, a
company with $1 trillion in assets and $95.8 billion in shareholders' equity, suddenly collapsed. It then details the terms of the government bailout,
explores why it was... Show more content on Helpwriting.net ...
Comm. on Banking, Housing & Urban Affairs, 111th Cong. 1–2 (2009) (statement of Donald L. Kohn, Vice Chairman, Board of Governors of the
Federal Reserve System) [hereinafter Kohn Statement], available at http://banking.senate.gov/ public/_files/KohnStmtMarch52009.pdf. 2. Press
Release, American International Group, Inc., AIG Reports Full Year and Fourth Quarter 2007 Results (Feb. 28, 2008), available at http:/
/idea.sec.gov/Archives/edgar/data/5272 /000095012308002282/y50505exv99w1.htm. 3. Yahoo! Finance, AIG: Historical Prices for American
International Group, Inc., http://finance.yahoo.com/q/hp?s=AIG (last visited Sept. 29, 2009) (on file with the Washington and Lee Law Review).
THE AIG BAILOUT 945 loan.4 Government aid has since grown to $182.5 billion,5 and as recently as June 2009 AIG's stock traded at less than
$1.00 per share.6 AIG's collapse was caused largely by its $526 billion portfolio of credit default swaps (CDSs), a type of credit derivative widely
used by financial institutions but, up until recently, largely unknown by the general public.7 AIG's troubles have been covered extensively by the
media but are difficult to comprehend fully because of the esoteric financial instruments involved. Thus, this Article weaves explanations of CDSs,
asset–backed securities, securitization, tranching, and collateralized debt obligations into a detailed and systematic account and analysis of

Questions On Options And Options
в‘ў Options
Options are traded both on exchanges and in the over–the–counter market. There are two types of option which are call option, giving the holder the
right to buy the underlying asset by a certain date for a certain price, and put option, giving the holder the right to sell the underlying asset by a certain
date for a certain price, while both the counter–parties only have obligations (usually the speculators). Apart from that, depending on the expiration
date, American options can be exercised at any time up to the expiration date while European options can be exercised only on the maturity itself.
Because of the right that options provide to the holder to decide whether or not to exercise the contract, there is a cost to ... Show more content on
Helpwriting.net ...
And all the difference here is the reason why options require a premium.
в‘Ј Swaps
Swaps now occupy a position of central importance in over–the–counter derivatives market. The statistics produced by the Bank for International
Settlements show that about 58.5% of all over–the–counter derivatives are interest rate swaps and a further 4% are currency swaps. A swap is an
over–the–counter agreement between two parties to exchange cash flows in the future. The agreement defines the dates when the cash flows are to
be paid and the way in which they are to be calculated. Usually the calculation of the cash flows involves the future value of an interest rate, an
exchange rate, or other market variable. The most popular (plain vanilla) interest rate swap is one where LIBOR is exchanged for a floating rate of
interest. In this swap, one party agrees to pay the other party interest at a fixed rate on a notional principal for a number of years. In return, it receives
interest at a floating rate on the same notional principal for the same period of time. Principal amounts are not usually exchanged in the interest rate
swap.
Take another popular swap as an interpretation for hedging and speculation, which is currency swap. In its simplest form, this involves paying interest
on a principal amount in one currency and receiving interest on a principal in another currency.

Financial Crisis In Michael Lewis The Big Short
On March 10, 2010, Michael Lewis published The Big Short, a book divulging into how a small group of investors predicted financial crisis in 2008
and benefited off of what many people over looked. Lewis explained that these investors realized that the banks were giving out crazy mortgage rates
and loans which people wouldn't be able to pay back. After this epiphany, they came to the conclusion that it would only be a matter of time before the
poorer people getting worse deals would default, causing a chain reaction and subsequently bringing down the entire American housing market and
economy. In order to make money they purchased CDSs – credit default swaps – as a way to bet against the housing market and after a lot of patience,
received a hefty return on what many thought was a crazy investment. As aforementioned, the author of The Big Short is Michael Lewis, an
experienced, well renown writer who has published multiple New York Times bestselling books on countless different subjects spanning from global
finance to athlete narratives like The Blind Side. When it comes to writing about finance and the volatile market place, there is no one more credible
than Michael Lewis. Born to J. Thomas Lewis, a successful corporate lawyer, Michael Lewis was given almost every... Show more content on
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By looking at each investors situation through a narrative on their lives during the four years preceding the crash, Lewis gave the reader an in depth
view on each investor's every move, allowing them to get a stronger understanding for why they did so. One thing that I thought would have been
beneficial would be if he explained how banks and companies have learned from this traumatic mistake and have worked to ensure it will not happen
again. Besides that, the book was almost perfect and has inspired me to learn more about the topic

An Analysis Of The Trading Of Derivatives
Kevin Cone and Madison Schaefer
Professor Nutting
Management 6
December 12, 2014
"An Analysis of Trading in Derivatives"
12 years ago, Warren Buffett warned that derivatives were "financial weapons of mass destruction" (Lenzner). 6 years after he made this statement,
derivative traders helped induce the biggest financial crisis in America since the Great Depression. Derivatives are highly complex financial instruments
that have fundamentally changed the way we perceive finance. Trading these derivatives has caused a financial revolution that has generated both a
huge amount of potential, and an an equally huge amount of risk. Derivatives, in a nutshell, are highly complex financial instruments whose values are
dependent on, calculated ... Show more content on Helpwriting.net ...
Because companies have the ability to swap an extensive variety of things, swaps are often overarchingly defined as "an exchange in future cash
flows" (IP). One common type of swap is an interest rate swap. In this case, a company agrees to swap some or even all of their interest rate
payments with another company. Interest rate swaps can occur because companies with different backgrounds and reputations will usually generate
different credit ratings. These credit ratings often correspond to differing interest rates charged by lenders. For example, an established and reliable
company may experience a high credit rating and receive a fixed interest rate, while a newer and more opaque company may experience lower credit
ratings and receive a variable interest rate. These companies can opt to swap interest rate payments if each believes that the opposing party's interest
rate setup will eventually turn out to be more advantageous in the long–run. In effect, these companies are utilizing a comparative advantage in order to
achieve their financial goals.
Another example of a swap is a credit default swap (CDS). By selling CDS contracts, banks offer an extremely attractive option to people who are
lending money to major companies. A credit default swap contract basically ensures a lender that a bank will financially cover all of his/her losses if
his/her lent credit were to somehow default. The bank will do this in exchange for regular payments

History Of The Great Depression

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History Of The Great Depression