nswer: (1) Why did declines in house prices and the stock market repre- sent the principal factors that led to the Great Recession of 2007-2009? (2) Are Fannie Mae and Freddie Mac different institutions today than when they were originally created? Where did things go wrong for these institutions? (3) Naked credit default swaps (CDSs): (a) have a constructive role to play in the management of port- folio risk for financial firms and helped to alleviate the fi- nancial crisis of 2007-2009. (b) are financial instruments used strictly for speculative pur- poses, but nonetheless helped to alleviate the financial cri- sis of 2007-2009. (c) are financial instruments used strictly for speculative pur- poses, and they contributed to deepening the financial cri- sis of 2007-2009. (4) How does a Credit Default Swap (CDS) differ from a standard insurance contract