FINE 3200 Lecture Notes - Lecture 1: Portfolio Insurance, Eurocurrency, Yield Spread
Document Summary
To balance the needs of between current and future. Crash in 1987 set the stage for the economic and financial boom of the 1990s. 1990s tech era small firms with fast growth unsophisticated investors attracted and invested blindly lead to the bubble unwarranted inflation in asset values. Commodity boom 180% fain from 2002 to 2008 barely moved in 2013 for ca. Real assets bubble housing bubble (cid:373)o(cid:396)e people a(cid:271)le to fi(cid:374)a(cid:374)(cid:272)e the pu(cid:396)(cid:272)hase of ho(cid:373)es that should"(cid:448)e (cid:271)ee(cid:374) u(cid:374)affo(cid:396)da(cid:271)le. Recessions caused by financial crises has greater and longer lasting effects quantitative easing: expanding the money supply through printing new money to purchase gvt securities spur inflation. Inappropriate regulation of derivative security ( ) + unrealistic market math model. Companies only got involved in the trade when 1. Bonds: indebtedness + specific term of repayment. Stocks: ownership rights no guarantee of fixed/positive return relatively more liquid limited liability.
