Briefly explain mortgage securitization and how it contributed to the global economic crisis.

Assume that you recently graduated with a degree in finance and have
just reported to work as an investment advisor at the brokerage firm of
Balik and Kiefer Inc. One of the firm’s clients is Michelle Dellatorre,
a professional tennis player who has just come to the United States
from Chile. Dellatorre is a highly ranked tennis player who would like
to start a company to produce and market apparel that she designs. She
also expects to invest substantial amounts of money through Balik and
Kiefer. Dellatorre is also very bright, and, therefore, she would like
to understand, in general terms, what will happen to her money. Your
boss has developed the following set of questions which you must ask and
answer to explain the U.S. financial system to Dellatorre.
a.Why is corporate finance important to all managers?
b.
Describe the organizational forms a company might have as it evolves
from a start-up to a major corporation. List the advantages and
disadvantages of each form.
c. How do corporations go public and continue to grow?
d.What should be the primary objective of managers?
e.What three aspects of cash flows affect the value of any investment?
f. What are free cash flows
g. What is the weighted average cost of capital?
AND SO ON
p. Briefly explain mortgage securitization and how it contributed to the global economic crisis.

 

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