Question

Which of the following events contributed to the 2007 financial crisis? Check all that apply. Homeowners who took out mortgages could also use their home equity as collateral to generate a home equity line of credit and use additional loans to fund discretionary spending. Oil prices were rising, generating surplus funds for oil-rich countries that were investing in the liquid bond markets of the United States. Investors across the globe were buying mortgage-backed securities because of the high rate of return these securities were generating. Interestingly, most of these investors chose to remain ignorant of the low risk of default involved in such investments. Emerging markets were generating foreign reserves and investing in the United States, making funds easily available in the United States and keeping interest rates low.

          Which of the following events contributed to the 2007 financial crisis? Check all that apply.
Homeowners who took out mortgages could also use their home equity as collateral to generate a home equity line of credit and use additional loans to fund discretionary spending.
Oil prices were rising, generating surplus funds for oil-rich countries that were investing in the liquid bond markets of the United States.
Investors across the globe were buying mortgage-backed securities because of the high rate of return these securities were generating. Interestingly, most of these investors chose to remain ignorant of the low risk of default involved in such investments.
Emerging markets were generating foreign reserves and investing in the United States, making funds easily available in the United States and keeping interest rates low.

Added by Heather P.

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