Define the following terms and explain why they were important during the housing and credit crisis of 2007-2009 a.Securitization b. Subprime loan c. Asset write-down
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Define the following terms and explain why they were important during the housing and credit crisis of 2007-2009
a.Securitization
b. Subprime loan
c. Asset write-down
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- Explain how each of these factors contributed to the financial crisis that started in 2007. 1.Subprime loans 2.Mortgage Backed Securities (MBS) 3.Collateralized Debt Obligations (CDOS) 4.Special/Structured Investment Vehicles 5.Credit Rating AgenciesThe _____ ratio gives actual losses on loans, while the ______ ratio gives the extent to which the bank’s assets are devoted to loans. a. loss rate; capitalization b. loss rate; loan risk c. loan risk; loss rate d. operating efficiency; loan riskUse FASB Accounting Standards Update (ASU) No. 2016-13 and the IFRS-9: Q: Which expected credit loss model would be more effective in preventing future financial crisis: the IASB-IFRS 9 model or the FASB-ASU 2016-13 model? Why?
- The APR is a. the average annual percentage cost paid on deposits b. the average rate paid on deposits c. the average rate paid for credit d. the average annual percentage cost paid for credit Decreasing the amount of liquid assets held for the purpose of meeting loan demands and deposit withdrawals and increasing the usage of deposit and nondeposit sources of funds paying market rates of interest is known as: a. leverage adjustment b. liability management c. liquidity management d. liquidity adjustment Times interest earned is a measure of the a.gross profit compared to annual interest payments b.net earnings after taxes compared annual interest payments c.operational earnings of the firm (EBIT) compared to annual interest payments d.net earnings before taxes compared to annual interest payments A Bankers’ Acceptance is most commonly used in connection with a. financing inventories b. financing securities c. financing trust accounts d. financing foreign tradeMoral hazard or its reduction explain the following except: O A. Collateral requirements for loans. O B. The Enron and Tyco scandals. O C. The success of zero commission trading. O D. Covenants requiring borrowers to provide information periodically.A. What is the subprime mortgage market? B. What important role did these subprime mortgages play in the 2008 Financial Crisis?
- Based on the Cardinal Credit Financial Statement below, write a bulleted list analysis that includes: a) Do you think the main changes from year to year are good or bad and why do you think so?Savings rate, Recession, Depression are factors relating to: a. Macroeconomic environment b. Microeconomic environment c. Internal Factors d. Financial InstitutionsExplain CECL (“Current Expected Credit Loss”) model.
- Which of the following is the function of the financial market ? Select one : a . It decides the interest rate b . It makes loan available c . It channels funds from lenders - savers to borrowers - spenders D. None of theseExplain why the covered interest rate parity (CIP) condition can be violated during the financial crisis based on Naohiko Baba and Frank Packer (2009)..discusses the impact that the recent global credit crisis has had on REIT distributions and capital structure decisions