FINM7405 Individual Assignment
Due Date: 24th of May 11:59pm
Weighting: 15%
Type: Individual
1. Give a brief history of mortgage-backed securities from their inception until the end of the financial crisis. Why were they originally invented? Why were they so profitable for banks? Do we have a mortgage-backed securities market in Australia? Explain (500 Words)
In this question, you will have to look back in history to find when MBS was first used and track its history until 2008. Your primary sources here will likely be news media from reputable sources and academic papers.
2. Why was Lehman Brothers allowed to fail but AIG was not? If it was your decision would you have bailed out Lehman or AIG? (500 Words)
You will need to examine each company's financial situation when the financial crisis hit to determine why one was bailed out and the other was not. Your main sources here will most likely be news media from reputable sources.
3. Explain the recent turmoil of Silicon Valley Bank. Describe the crisis they faced and assess whether you think they had sufficient risk management techniques. (500 Words)
We did not discuss this issue in class, so you will have to do your own research on it. For the most part, you can rely on print media or perhaps also some explainer videos by reputable sources on YouTube. Over the next few weeks, I will suggest some sources for you to look at.
4. Do you think credit default swaps should be regulated? Go over the key arguments for and against regulation. Do you think people should be able to hold CDS if they do not hold the underlying asset? Why/why not? (500 Words)
In class, we reviewed some arguments for and against CDS. Now, it is your job to discuss these arguments in more detail and make an argument for or against their legality. In your answer, you will discuss their effect on the market and, subsequently, society. You will need to use news sources and academic references here to do well.
Marking Breakdown
Each question is worth 2.5% of your grade, making 10% in total. The remaining 5% will be divided into presentation (2.5%) and quality of sources (2.5%). This sums to 15%. Wikipedia and Investopedia are not acceptable sources. They may, however, be good places for you to start your research. I have suggested previously that you use the UQ Harvard referencing style. a description of which can be found here:
https://guides.library.uq.edu.au/referencing/uqharvard
For each question, your answer will be marked on the following scale:
- Very Good: 2-2.5%
- Good: 1.5-2%
- Satisfactory: 1.25%
- Poor: 0-1.25%