Principle of Finance-Discussion Prompt #2
Question Description
Discussion Prompt #2
Your initial post should be 75-150 words in length.
Thefinancial crisis was caused by several factors related to investmentsin real estate. Financial institutions lowered their standards forlending to prospective homeowners, and institutions also investedheavily in mortgage-backed securities. When home prices fell andmortgage delinquencies rose, the value of the mortgage-backed securitiesheld by banks plummeted, causing some banks to fail and many others torestrict the flow of credit to business. That, in turn, contributed to asevere recession in the United States and abroad.
Question
Thefinancial crisis was caused by several factors related to investmentsin real estate. We have discussed a variety of reasons whythe financial crisis occurred. Choose one of thesereasons and discuss why you believe this reason was at the root of 2008financial crisis and recession. In addition, discuss what legislationhas been enacted to prevent this event from taking place in the futureand causing another financial crisis.
Please provide original work. No plagiarizing.
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