Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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How did higher returns securities in the secondary mortgage market contribute to the liquidity crisis and global recession?
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- Investors typically buy and sell stocks, bonds and other securities in the secondary market. Describe the different types of security markets and why they are so different.arrow_forwardExplain the reasons for the emergence of financial crises in the world and what measures were taken to overcome the crisis.arrow_forwardDiscuss the Contribution of Stephen Ross(1976) to the theory of Financial Economics and identify the risk factors (in his model) which are applicable in our economyarrow_forward
- In 2008 there was an increase in uncertainty about the quality of structured financial products that were backed by mortgages (MBS - mortgaged backed securities). So that the market for these securities dried up (became less liquid). What policies the government could do to jump start (improve liquidity of) the marketarrow_forwardExplain what is meant by Creation of NPAs as a challenge faced by financial systemarrow_forwardExplain at least two important roles played by a safe asset in a financial market.arrow_forward
- Explain the role of financial innovation and the role of regulation in the generation of a financial crisis.arrow_forwardDefine and discuss the portfolio-balance effect in terms of Quantitative Easing and its impact on bond and stockarrow_forwardAnalyse the main mechanisms of credit risk transfer developed by banks between 1970 and 2007. In your assessment which of the developments mentioned would have most contributed to the global financial crisis?arrow_forward
- The subprime mortgage crisis of the mid 2000s in the USA was a result of ... a. Increasing mortgage rates. b. Inflated house prices. c. Poor credit management practices. d. Deregulation of the insurance sector.arrow_forwardfinancial markets that function well: a. increase the ease of converting common stocks into bonds b. reduce riskiness of most assets continually c. continually increase the liquidity of most assets d. including available information in asset pricesarrow_forwardWhat technological innovations led to the developmentof the subprime mortgage market?arrow_forward
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