Question
This question refers to the financial crisis that exploded in October 2008. The US banking crisis 2007-2008 was a financial cyclone with eye in collateral
This question refers to the financial crisis that exploded in October 2008.
The US banking crisis 2007-2008 was a financial cyclone with eye in collateral debt obligations and a subset of US financial institutions. In October 2008, there was a bank run in the US, a drastic reduction of the money supply and the credit market was frozen. Explain the following points:
(a)Precise description of Sub-prime mortgage, Securitization, and Collateral Debt Obligations [9 marks];
(b)The reason for the sudden stop of credit markets in 2008 [10 marks]; and
(c)The reason for the reduction in the money supply [11 marks]
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