Collateralized debt obligation

The Imminent High-Yield Debt Catastrophe The Imminent High-Yield Debt Catastrophe High-yield debt investments, which are often called junk bonds, are investments that typically have lower credit ratings and higher risks, but many investors choose these vehicles to receive higher yields when traditional stocks and investments are only generating modest returns. China 's economic problems and heavy investments in high-yield debt have exacerbated the problems of investors tying up too much money…

400 billion. Their assets however were highly leveraged and this was a significant cause for their failure during the crisis. They had no way of compensating for their collateralized debt obligations and they ultimately failed. They had to get bailed out by the Fed and sold to JP Morgan Chase for $10 a share, which is insane to think about considering their stock was trading for over $90 dollars a share earlier in 2008. The main failure…

he problem Bear Stearns under the auspices of two hedge funds through its subsidiary, Bear Stearns Asset Management. The main fund, the structural fund high-quality credit strategies, and consists of a complex Derivatives backed by mortgages. During most of his life was very profitable but also The housing market began to stutter in late 2006 suffered returns. It has been collected in this fund 35 His times the money invested. With the deterioration of the proceeds of the two funds market sank.…

Later in 2007, many CEOs of financial institutions lost their jobs if they were not successful in obtaining capital from hedge funds, private equity funds or other means. In 2008, the real estate market continued to fail which caused collateralized debt obligation (CDOs) to be marked down by billions of dollars. The summer of 2008 Fannie Mae and other mortgage companies collapsed. The government was afraid that this would bring down the remaining financial system. Shortly after Fannie Mae and…

The 2008 Global Financial Crisis is considered the largest monetary disaster since the great depression of 1929. According to Ben Bernake, it might have a resulted in 1930s style global financial and economic meltdown with catastrophic implications. In 2000s, global investors were searching for a low risk, high return investment, and so they started to throw their money at the United States housing market. However, global investors feel trouble to deal with individuals. Instead, they bought the…

factors behind the financial collapse of 2007-08. The film starts from the political movement behind deregulation of the 1980s, development of trading instruments like derivatives and bundling of loans and mortgages into what was called Collateralized debt obligations (CODs). The film delves into how the subprime borrowers were given house loans at low interest which in the end led to collapsing of the whole system. The film ends by saying that despite recent financial regulations, the…

crisis. Because, of the previous financial crisis there were changes in technology to manage risk and make capital less expensive and more available (pg.142). Some of the inventions were securitization, derivatives, credit default swaps, collateralized debt obligations, hedge funds, and arbitrage. Usually bankers only gave out loans to individuals and companies they believed could repay the loan (pg. 143). However, these just increased the chance of the financial crisis. Another cause of the…

Act of 2000 was passed through, which contributed to the growth of derivatives. In the 2000s, the derivatives industry was dominated giant firms including Layman Brothers. Investment banks created CDOs (collateralized debt obligations) which is the combination of mortgages and other loans and debts, then they sold CDOs to investors. Because of the interest relationship a lot of CDOs was rated AAA. With the positive background, a great number of buyers were given…

Peter wants to buy a house but needs some assistance with the extensive research that has to take place when purchasing a home. First and foremost the basic information needs to be addressed. Peter has seen through an ad that he can obtain a loan through several options; a subprime rate, ARM, extended loan, and many other options. A subprime mortgage is a type of loan appropriate for individuals with poor credit scores usually below 600, who as a result of their deficient credit ratings wouldn’t…

Monica Patel ECON 4210 10/29/14 Problem Set 2 The 2007-2009 financial crisis originated in the United States, and was primarily caused by the introduction of subprime mortgages. In the years leading up to the crisis, new methods for evaluating risk surfaced and this allowed financial institutions to offer borrowers with higher risk a new type of mortgage, known as a subprime mortgage. These subprime mortgages were then bundled into various types of securities, all done with the intention to…