Due Date: 27th of October 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? How were they misused? (500 Words)

In this question you will have to look back in history to find when MBS were first used and track their history up until 2008. Your main sources here will most likely be news  media from reputable sources and academic papers.

2.   Why was Lehman Brothers allowed to fail but AIG was not? (500 Words)

You will need to look at the financial situation of each company when the financial   crisis hit in order to weigh up why one was bailed and the other was not. Your main sources here will most likely be news media from reputable sources.

3.   What was the role of credit ratings agencies in the crisis? What changes did the

credit rating agencies make after the financial crisis? Do you think these changes are sufficient to avoid another financial crisis. (500 Words)

Many mortgage backed securities were rated at AAA but contained a lot of loans of    sub prime quality. Did the agencies make a mistake? Was it deliberate? How did this   contribute to the crisis? News sources will be good references here, however, you will also need to look into some academic sources to explain mortgage backed securities  and the credit ratings process.

4.   Do you think credit default swaps are a positive thing for the market/society?

Why/why not? In your answer go over the reasons for and against CDS and then give your opinion on if they are beneficial or not. (500 Words)

In class we went over some arguments for and against CDS. It is now your job to go into more detail and make an argument for or against the legality of CDS. In your answer you will have discuss their effect on the market and subsequently, society.  You will need to use news sources as well as 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