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The Events following 2006.... The events following 2006 shook the global markets, leading to a historic economic and financial crisis that affected individuals, businesses, and
The Events following 2006....
The events following 2006 shook the global markets, leading to a historic economic and financial crisis that affected individuals, businesses, and governments around the world. Several complex and interdependent factors caused the financial crisis. One of these factors is based on the theory that asset bubbles often precede a financial crisis. An asset bubble occurs when the asset sells for a value than its fundamental value. The real estate bubble in the United States, which grew as the demand for housing increased in the early 2000s, is considered to be one cause of the 2007 crisis. Which of the following events contributed to the 2007 financial crisis? Check all that apply. Many subprime borrowers were unable to make a down payment for their mortgage loans. Many low-income borrowers relied on the appreciation of housing prices to refinance their loans. The federal government encouraged home ownership among low-income families by guaranteeing the majority of mortgage loans. Oil prices were rising, generating surplus funds for oil-rich countries that were investing in the liquid bond markets of the United States. The credit freeze and lack of disposable income that affected consumer spending led to significant losses and revenues for businesses. This in turn led to lower stock prices and drove several firms to bankruptcy. Which of the following firms would have likely performed better during a financial crisis? Firms that based business decisions on speculation Firms that lowered debt in their capital structureStep by Step Solution
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