UPLEARN market failure in the financial sector Flashcards
1
Q
why did they give out subprime mortgages?
A
they would give out sub prime mortgages to people like strippers in florida and then increase the interest rates without them realising increasing the amount of money they make but then the strippers cant pay it back at all
2
Q
how do adjustable rates mortgages work?
A
start with low interest rates with teaser rates then slowly increase over time making the selfish banks more money
3
Q
Why did the bankers think they had found a win-win formula with the adjustable rates?
A
They could either make profits from the mortgage repayments or from selling the house at a higher price if the borrower defaulted
4
Q
A
