Write an account of the crash of 2008 which explains the interaction of all the following. I) Herding, bubbles and speculation II) Private banks’ credit creation
finance
Description
- Write an account of the crash of 2008 which explains the interaction of all the following. I) Herding, bubbles and speculation II) Private banks’ credit creation, the housing bubble, financial asset bubble and the nature of CDOs III) The accusation that deregulation created a chain of perverse incentives IV) Changes in how risk was taken and managed V) Concentration in banking, leverage, and the effect of the repeal of Glass Steagall and blocking of other regulation
- Explain the following aspects of risk (assume we are talking about the calculable probability kind): A) Risk aversion B) The Risk-Return Trade-Off C) The distinction between Idiosyncratic and Systemic Risk. D) What is hedging, and which kind of Risk does it relate to? E) What is risk Spreading, how is it different to Hedging and what can it do that Hedging may not do?
Write and submit in a word doc. Do not use direct quotes or plagiarise. Write 500-1500 words, enough for a comprehensive answer.
