The Big Short (2015) Answer the questions below after watching The Big Short (2015).
1. The Market
(a) What kind of market is dealt with in the movie? (e.g. Bond market, Stock market)
(b) In the market you described above, what kind of assets do financial intermediaries issue to make money?
(c) Provide two or more examples of collateral.
(d) Provide one or two examples of bonds in real life. (For example, bonds issued by the U.S. government; what are their names?)
2. The Big Short
(a) How does the asset, which Jared Vennett, Mark Baum, and Michael Burry hold work? (Explain what their asset is against)
(b) Explain how mortgage securitization works briefly (Mortgage-backed security; MBS)
(c) What problems in the bond market do Mark Baum and his colleagues find when they meet people in Florida?
3. The Great Recession
(a) Write two rating agencies mentioned in the movie and their problems.
(b) What initiates the financial crisis?
(c) Explain how the financial problems in one market are spread to other markets.
4. The Consequence
(For this part, you need to look up articles and elaborate on your opinions)
(a) Which financial intermediaries filed for bankruptcy?
(b) Explain what the U.S. government did to overcome the financial crisis (2007-2009).
(c) Find Federal Debt: Total Public Debt and plot it below. (Compare before and after 2007). What do you think about the consequence of the financial crisis?