Notable Historical Events in Finance &Regulations Flashcards
Mortgages
type of collateralized loan where a house or building is used as collateral by the borrower to achieve lower rate loans than if no collateral is provided.z`
Acid Rain Program
a market-based approach, initiated by the US Environmental Protection Agency (EPA), to curb levels of sulfur dioxide (SO2) and nitrogen oxides, which are major contributors to acid rain.
Allowances
plants are granted permits (allowances), which specify the amount of SO2 they can emit. Plants can buy and sell allowances based on their individual needs and costs
What does the success of the emissions allowance market depend on?
the effective regulatory cap on the total number of allowances.
Why did Nauru enjoy the highest GDP per capita of any country on Earth?
This was exclusively due to the island’s once abundant potash deposits.
Tulip Mania
- one of the first economic bubbles in history
- bizarre event where single tulip bulbs achieved prices higher than town homes in Amsterdam
Margin Calls
brokers demanded additional capital to keep the stock (as the stock asset was no longer worth enough to cover the loan).
What did the Tulip Mania bubble demonstrate?
that the price of a good need not be connected to its functional utility and that greed and fear can drive markets.
2000 Dot-com bubble
the promise of abandoning costly brick and mortar stores in place of easy to use and low cost webpages seemed to promise a new era of hyper-profitable commerce and so money flooded into stocks.
2008 MBS Crisis Causes
- Roots in an innovation in the 1970s
- Culmination of 1980s deregulation
- Demographic shifts of a large high-income baby boom generation approaching retirement
- shortage of high-yielding alternative investments
2008 MBS Crisis Result
flood of money entering the housing market, which was facilitated by the Mortgage Backed Security
