Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

AIG played a central role in the financial crisis by issuing swaps to investors in CDO tranches, promising to reimburse them for any losses on the tranches in exchange for a stream of premium-like payments. AIG was rated AAA in 2006. This credit default swap protection made the CDOs much more attractive to potential investors because they appeared to be virtually risk free, but it created huge exposures for the credit default swap issuers if significant losses did occur. Once investors lost faith in the quality of the protection offered by the CDS the demand for the risky tranches of CDOs fell off. This depressed the price of the underlying mortgage collateral. As the price of subprime mortgage collateral dropped the capital positions of financial institutions that were holding tranches of CDOs fell.

True or false and why?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925903

Have any Question? 


Related Questions in Basic Finance

A researcher examines the relationship between the quality

A researcher examines the relationship between the quality of breakfast and academic performance for a group of elementary-school children. For each child, the researcher interviews the parents to obtain information abou ...

Analyze print communication-find an example of print

Analyze print communication:- Find an example of print communication, for example, a flyer on campus, a newsletter, or a magazine ad. With a partner, discuss why the creator of the message may have chosen a print medium. ...

1 what is the role of finance in a strategic plan2 what are

1) What is the role of finance in a strategic plan? 2) What are operating and financial plans? Please elaborate

1 discuss some of the major issues to consider when

1. Discuss some of the major issues to consider when choosing between an active or passive exporting strategy. 2. You work for a small company that has an innovative low-cost production method for high-capacity jump driv ...

Required for each of the following numbered items you are

Required For each of the following numbered items, you are to select the lettered item(s) that indicate(s) its effect(s) on the corporation's statements. If more than one effect is applicable to a particular item, be sur ...

The whilst co is analyzing a project that has projected

The Whilst Co. is analyzing a project that has projected sales of $189,400 and costs of $102,300. The project requires an investment in inventory of $15,000 plus another $28,000 in accounts receivable. Fixed assets of $8 ...

1 discuss the advantages and disadvantages of single-case

1. Discuss the advantages and disadvantages of single-case experimental designs, relative to group designs. 2. What is a case study? Are case studies an example of descriptive, correlational, experimental, or quasi-exper ...

What rate of return do investors require on general

What rate of return do investors require on General Electric (ticker: U:GE) common stock? Use the annual dividends per share reported for the last fi ve years to determine the compound annual growth rate in dividends. As ...

1 distinguish between concurrent and predictive validity do

1. Distinguish between concurrent and predictive validity. Do these terms refer to types of construct validity or criterion-related validity? 2. How can we tell whether a particular measure is biased against a particular ...

Financial management please respond to the

Financial Management" Please respond to the following: • Explain the three methods for calculating credit card interest and your reason for going with a particular method. • Provide an example of how you can use the powe ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen