BUSA 100 Lecture Notes - Lecture 12: Bond Credit Rating, Insider Trading, Proprietary Trading
Document Summary
Homes should be affordable for everyone (according to bush) People forfeited their mortgages because the mortgage was more than original value banks were left with houses. Canada"s policy you have to cosign for the house, down payment. Therefore, no one would borrow money if they knew they couldn"t afford (cannot just walk away) Companies covet high ratings so that cost of capital is lower rating agency reflects this company pays rating agency. Diversification takes away risk (buy both companies to make consistent money) Rating agency rated diversification (but diversity was only on mortgage, so they all went down together) given aaa ratings.
