BUSI 4502 Study Guide - Final Guide: Credit Default Swap, Fiduciary, Mutual Fund
30 Aug 2018
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Document Summary
This article explains about the underestimation of risk regarding global financial crisis and ways to improve the global financial markets for the future. During the interview, john bogle pointed out that the cause of an ongoing economic crisis is mainly due to underestimation of various risks by u. s. investors like budget deficits, global warming, political system, social gap and lack of leadership. Characteristics of black swans are known as events that carry extreme impact and an outlier beyond expectation. After it occurring, we tend to have retrospective predictability, causing us not learning from mistakes. As for the recent economic market bubble, the common repeated factor is due to cheap credit. Credit default swap and change in ownership of securities are also contributing factors as well. Agency theory is mentioned here whereby managers own interest of accumulating assets and earning large fees were considered first as compared to investors" needs and returns.
