The Financial Crisis Of 2007

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Financial Crisis of 2007 How an attempt to avoid a bubble, led to a crash that brought a country near to complete collapse. Essay for Mn2101 Financial Management by Shreya Lodhia 139030749. Word count: 2172 (2214- including titles/headings/subheadings.) CONTENTS  Introduction 2  Causes of the crash 3  Effects today 6  Why interest rates are low 8  Future of the interest rates 9  Conclusion 10  References 11  Appendix 14 Financial Crisis of 2007 How an attempt to avoid a bubble, led to a crash that brought a country near to complete collapse. Introduction The Financial crisis of 2007 was one of the largest crises the world had faced since 1980, which almost brought the economy of one of the strongest and largest country, USA, to a near collapse in 2008/9. It was triggered by the housing bubble bust, which had taken place due to the creation of toxic subprime mortgages. The increase in irresponsible lending, as well as extreme borrowing through the use of exceptional securities, made the economy highly geared. With a reality being uncovered, of the reckless borrowing and lending by large financial institutions, the curtains came down quickly. The first part of this essay will be examining the cause of the financial crash followed by the effects of the crash on the economy today. The last part of the essay will be addressing the issue of why interest rates have remained low and my views on whether

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