3. Explain what subprime mortgages are. How were mortgage companies able to aggressively offer these types of loans in the years leading to the credit crisis? How did the repayment of subprime mortgages compare to the repayment of prime mortgages during the credit crisis? 4. Describe what mortgage-backed securities are and how they are used. Many investors that purchased these types of securities before the 2007-08 credit crisis suggest that they were misled, because these securities were riskier than they thought. Who do you believe was at fault?

5. What are IPOs and why do firms engage in them? How do firms place their shares in the market during and IPO and what affects the demand for IPOs (from the issuer side)? Explain the difference between obtaining funds through venture capital and engaging in an IPO. How do venture capital firms use IPOs?

6. How do you think irregularities in financial reports can affect the prices of corporate shares? How do investors respond to potential accounting irregularities by publicly traded firms? Describe the provisions of the Sarbanes- Oxley Act and explain how these provisions deal with the issue of accounting