Just before the collapse of the subprime mortgage market in 2007, the most important credit-rating agencies rated
Question:
Just before the collapse of the subprime mortgage market in 2007, the most important credit-rating agencies rated mortgage-backed securities with Aaa and AAA ratings. Explain how it was possible that a few months into 2008, the same securities had the lowest possible ratings. Should we always trust credit-rating agencies?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 54% (11 reviews)
Historically mortgagebacked securities were considered lowrisk asse...View the full answer
Answered By
Mugdha Sisodiya
My self Mugdha Sisodiya from Chhattisgarh India. I have completed my Bachelors degree in 2015 and My Master in Commerce degree in 2016. I am having expertise in Management, Cost and Finance Accounts. Further I have completed my Chartered Accountant and working as a Professional.
Since 2012 I am providing home tutions.
3.30+
2+ Reviews
10+ Question Solved
Related Book For
Economics of Money Banking and Financial Markets
ISBN: 978-0134733821
12th edition
Authors: Frederic S. Mishkin
Question Posted:
Students also viewed these Business questions
-
Nationally Recognized Statistical Rating Organizations (NRSROs), or creditrating agencies, provide investors with independent assessments of a debt issuers ability to make scheduled interest and...
-
The following is reproduced from the Prospectus of the T. Rowe Price Institutional Core Plus Fund dated October 1, 2010: Principal Investment Strategies: The fund intends to invest at least 65% of...
-
In 2006, Arnold Diaz was a bright, upcoming audit manager in the South Florida office of a national public accounting firm. He was an excellent technician and a good "people person." Arnold also was...
-
Using the following information, determine the activity rate for the quality inspections activity. Budgeted Activity Cost Pool Activity Setups Estimated Activity Base 1,000 $60,000 Purchase orders...
-
Collins Ltd. has these transactions related to intangible assets and goodwill in 2012, its first year of operations: Jan. 2 Purchased a patent with an estimated useful life of five years and a legal...
-
Freddy Investor says, "The shares I recently bought just declared a 2-for-1 stock split. Now I've doubled my investment!" Is Freddy correct-is he any better off after the stock split?
-
Rudiger is sitting at his desk in his seventh-floor corner office in the city, gazing out over London and reflecting on life. At 43, he is at the top of his game. He has everything he could wish fora...
-
The inventories of berry Company for the years 2016 and 2017 are as following: Berry uses the periodic inventory method. Required: 1. Assume the inventory that exited at the end of 2016 was sold in...
-
On December 31, 2020, Sheridan Company had $1,303,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,400 shares of its common stock...
-
Various cost and sales data for Medco, Inc., are given below for the just completed year: Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare an income statement. 3. Assume that...
-
Predict what would happen to the risk premiums of municipal bonds if the federal government guarantees today that it will pay creditors if municipal governments default on their payments. Do you...
-
Do you think that a U.S. Treasury bill will have a risk premium that is higher than, lower than, or the same as that of a similar security (in terms of maturity and liquidity) issued by the...
-
The beam emerging from a 1.5 W argon laser ( = 515 nm) has a diameter d of 3.0 mm. The beam is focused by a lens system with an effective focal length fL of 2.5 mm. The focused beam strikes a totally...
-
1. Calculate f for a nachannel MOSFET whose T Cas 6.1 f F, C=1.7fF capacitances are given given as Cgs gd Assume operation current at 100 A, and that Kn= 160 A/V, W = 10m, L= 1m.
-
The most recent financial statements for Mixton, Incorporated, are shown here: Income Statement Balance Sheet Sales Costs $38,600 26,500 Assets $140,000 Debt Equity $39,500 100,500 Taxable income $...
-
P9-3 Before-tax cost of debt and after-tax cost of debt Simpson Web intends to acquire a bond issued by Orange Group. He has obtained the following information on the security. Bond of Orange Group...
-
You want to buy a $33,000 car. The company is offering a 5% interest rate for 5 years. What will your monthly payments be? Feel free to use the Online Basic Financial Calculator $
-
Suppose that, holding yield constant, investors are indifferent as to whether they hold bonds issued by the federal government or bonds issued by state and local governments (that is, they consider...
-
Explain why there is such a strong relationship between pay and performance for brokers. Why isnt this true of many other jobs?
-
6. (Potential Energy and Conservation of Energy) What should be the spring constant k of a spring designed to bring a 1200-kg car to rest from a speed of 95 km/h so that the occupants undergo a...
-
A $1,000-par value bond issued by Verizon has a coupon rate of 9.5%. The bond has 20 years left to maturity and the market's required yield to maturity for similarly rated debt was 6.5%. What is the...
-
Calculate the yield to maturity for a corporate bond issued by DaimlerChrysler with the price of $800.20, where the bond has a maturity of 11 years, a face value of $1,000, and the annual interest...
-
What are the determinants for an average investor when facing a choice of investing in either properties or shares?
-
Compare and contrast Russia and the United States using Hofstede's four original cultural dimensions: power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus...
-
Suppose you wanted to know the mean VO2max in milliliters per kilogram per minute of all females at a university. You randomly select 50 names from the files of the administration office and invite...
-
(a) A local printer (within the network) is turned on but is not responding from other computers. (b) What tool will allow you to know if it is connected to the network? PING IFCONFIG IPCNONFIG...
Study smarter with the SolutionInn App