Why do banks choose to securitise their assets? Explain how securitisation may exacerbate the asymmetric information problems in the financial markets. Discuss the role of mortgage-backed securities in the financial crisis of 2007-2008

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Q: What is securitisation? Explain briefly the securitisation process and the reasons why banks choose…

A: securitization is the act of pooling together different sorts of obligation instruments (resources,…

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A: Securities refers to financial instruments used to raise capital in private and public markets. The…

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Q: How can the existence of asymmetric information providea rationale for government regulation of…

A: Asymmetric information is a situation the information possessed by the parties is not symmetric. In…

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A:

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A: What is a Flash Crash?  A flash crash can be defined as an occasion in electronic protections…

Q: Describe the process of “securitization” in your ownwords. Was this process solely responsible for…

A: Answer: Introduction:Securitization refers to the practice of converting assets/debts (especially…

Q: Global financial markets are becoming increasingly interconnected with more linkages between…

A: ANSWER   Global financial market are becoming the increaingly connected with more linkage and…

Q: Explain the following statements: "(1) individual financial institutions will generally have…

A: Financial institutions are also known as banking institutions which provides intermediary services…

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Q: Why are companies' liquidity ratios calculated and which assets are more liquid?

A: Liquidity ratio: It is a type of financial ratio.

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A: Regulatory capture is a situation in which the authorities, agencies, or officers who are appointed…

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A: The banking sector manages cash, credit, and other financial transactions for both private…

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A: ALM is a method of managing financial risk that arises due to the mismatch in the assets and the…

Q: Treasury securities are less liquid than debt securities issued by a small firm. true or false

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Q: Contrast the risk tolerance and Liquidity needs for Banks and Individual investors

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Q: Differentiate among   ABS, MBS, CDO, CDS, and CMO. Discuss their role in the 2008 global financial…

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Q: What would happen if the us treasury department stopped issuing new securities?

A: Although rare, especially in the case of US Treasury securities, such a situation might have…

Q: Possession of information by one party in a financial transaction but not by the other party is…

A: answer : asymmetric information where possession of information by one party in a financial…

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A: 1. Fractional reserve banking is a banking system in which only a fraction of bank deposits is held…

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Q: Explain the functions of financial markets with the help of a structured diagram.

A: Working of Financial Market The activity of lending and borrowings occurs in the Financial/Monetary…

Q: Provide a detailed analysis of the impact of informational asymmetries on financial markets and the…

A: The situation when one among the two parties tends to possess more information as compared to the…

Q: How does a bank adjust its pricing of a loan with high default risk? Use average historical cost of…

A: Default Risk Premium: An additional interest rate charged to compensate for the risk of a borrower…