Determine and discuss the underlying causes of problems experienced by financial institutions during the recent financial crisis. Explain how these problems might have been avoided.
Impact of Financial Crisis on Financial Market Liquidity: Explain the link between the financial crisis and the lack of liquidity in the financial markets. Specifically, offer some insight as to the reasons the debt markets became inactive at the time. How were interest rates affected? What happened to initial public offering (IPO) activities during the crisis period?
Risk Management: Discuss whether or not institutional investors that purchased mortgage-backed securities containing subprime mortgages followed reasonable investment guidelines and risk management.
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