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(b) During the European Debt Crisis, what happened to the default risk, the prices and the yields of the Greek government bonds? For those banks
(b) During the European Debt Crisis, what happened to the default risk, the prices and the yields of the Greek government bonds? For those banks holding the Greek sovereign bonds, what will be the effect of the above changes on their income statements and balance sheets? The percentage of Greek sovereign bonds in the northern European banks' balance sheet was in fact relatively small. Why were these northern European banks and their governments so worried about the above changes in Greece?(15 marks)
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