Leveraged Instruments, Their Credit Ratings, and Other Unorthodox Practices
To appreciate the wider impact of the debacle in subprime mortgages it is important to understand the explosion in supply of leveraged financial instruments; also, the negative aftermath of a steady policy of low interest rates and low credit ratings which followed the year 2000 stock market bubble. A combination of these factors saw to it that between 2001 and 2005, the annually issued amount of securitized mortgages of all sorts tripled in terms of dollar value.
KeywordsCredit Risk Credit Rating Hedge Fund Credit Spread Sovereign Wealth Fund
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