The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

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Answer 1

Question

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.

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Answer 2

Question

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.

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Answer 3

Question

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.

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Answer 4

Question

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.

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Answer 5

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.

Answer 6

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.

Answer 7

Chapter 24, Problem 1DYU

Summary Introduction

To discuss: The reason for the rapid growth and subsequent decline in loan sales over the last three decades.

Answer 8

Expert Solution & Answer

Explanation of Solution

Many of these loans have been priced far below their original book value, i.e. they have been listed as distressed loans (loans traded on the dollar below 90 cents). Distressed loan sales, caused by an economic slowdown, rose from 11% of total loan sales in 1999 to 36% in 2001, and 42% in 2002. Distressed loans, however, remained high, more than 20%. Distressed loans in 2007 accounted for only 9 percent of total loan sales and in 2008 they were below 8 percent of all loan sales. The country U economy continued to struggle in 2011 and 2012, and growth in sales of loans remained flat. Although the economy slowed in 2007 and 2008, although sales of loans rose to over $500 billion, sales of distressed loans remained low.

Although this industry has existed for many years, it grew slowly until the early 1980s when it entered a period of rapid growth, primarily due to the expansion of highly leveraged transaction (HLT) loans to fund leveraged buyouts (LBOs) and mergers and acquisitions (M&As). Nevertheless, the number of distressed loans dropped dramatically in 2011 and 2012, respectively, to 8.7 and 5.5 percent, as many financial institutions had already sold off their distressed marketable loans in 2009 and 2010. Loan sales slightly decreased as the country U economy started to improve in 2010. The volume of loan sales declined dramatically in the early 1990s as well as the decrease in LBO and M&A activity.