Class News (335/402): Extra Credit #2

You can earn extra credit by watching a PBS documentary on the financial crisis and writing a short paper. While we were discussing F&S Tuesday night, Frontline spent an hour on the crisis — staring with Bear Stearns and ending with TARP. It is superb. Here is a link to the PBS website where you can watch online: Inside the Meltdown.

After watching, write a 1-2 page paper (typed, double-spaced) summarizing key events in the crisis (i.e., what happened, when, and why was it important?). Again, this assignment is all-or-nothing.  Take it seriously, and you receive 100 on a quiz. Paper is due in class, Monday, March 2nd.

You might need some background on repos and credit-default swaps (CDS). A “repo” is a repurchase agreement — the sale of a security with simultaneous commitment to repurchase shortly. It is essentially a short-term loan. Here is a good link if you want more: Wikipedia – Repos. A CDS is essentially default insurance. Suppose you buy a bond; a CDS on that bond will make you whole should the issuer “go belly up.”  You (bondholder) have the  insurance; the CDS writer is the insurance company.  If you want more, follow this link: CDS Primer.

Hat tip to CeCe Ging for a “heads up” on the documentary.

Posted at 10:33 am

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