Brunnermeier, Deciphering the Liquidity & Credit Crunch 2007—2008 contains 15 pages covering the following concepts:
* Describe the key factors that contributed to the lending boom housing frenzy
* Explain the banking industry trends leading up to the financial crisis and assess the triggers for the liquidity crisis.
* Describe how securitized and structured products were used by investor groups and describe the consequences of their increased use.
* Describe the economic mechanisms through which the mortgage crisis amplified into a financial crisis.
* Distinguish between funding liquidity and market liquidity and explain how the evaporation of liquidity can lead to a financial crisis
* Analyze how an increase in counterparty credit risk can generate additional funding needs and possible systemic risk.
After reviewing the notes you will be able to apply what you learned with practice questions and answers. We have also included an appendix with Hull, Chapter 6, which was removed from the curriculum, but still contains relevant content.
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