Lehman Brothers, a giant investment company in the United States, announced in September 2008 that it would

Question:

Lehman Brothers, a giant investment company in the United States, announced in September 2008 that it would file for bankruptcy protection after suffering huge losses in the mortgage market. In 2010, the bankruptcy examiner's report stated that Lehman's accounting had misled investors. One of the tricks that Lehman used was to temporarily transfer investment assets to a related company in exchange for cash. The company then used the cash to temporarily reduce its liabilities by paying off debt, thus making its look better than it was. After the company's were published, it borrowed the cash again and took back the assets.
Instructions
(a) Who are the in this situation?
(b) Explain what the impact of paying debt off will be on the debt to total assets ratio.
(c) Explain how paying debt off and then immediately borrowing again, right after the are published, could mislead investors.
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