The principal and interest What is the true definition of Compound interest? Main part amount you are borrowing

Some commercial banks provide investment-banking services, such as underwriting securities and advising on mergers and acquisitions.

How many stages does Dynamics of Financial Crisis in Advanced economies include?

3
What were the sources of Banking crises (Stage 2) in Advanced economies?

• 
  The source of the contagion is asymmetric information. In a panic, depositors, fearing for the safety of their deposits (in the absence of or with limited amounts of deposit insurance) and not knowing the quality of banks’ loan portfolios, withdraw their deposits to the point that the banks fail.
  

During second stage of Financial crises, “fire sales” of assets were common action by banks. What does that term “fire sales” mean?

• 
  These fire sales of assets may cause their prices to decline so much that more banks become insolvent and the resulting contagion can then lead to multiple bank failures and a full-fledged bank panic.
  

Stage three of Financial crises in advanced economies is called “Debt deflation”. Why was it called so?

• 
  Debt deflation occurs when the fall in prices increases debt-servicing pressure on businesses and consumers who have borrowed money to finance their business operations, capital purchases, homes, and personal property.
  

Select the correct causes of the 2007–2009 Financial Crisis:

1. 
   Financial innovation in mortgage markets,
   
2. 
   Agency problems in mortgage markets, and
   
3. 
   The role of asymmetric information in the credit-rating process.
   

What was the most notorious of financial innovation products during 2007-2009 Crises?

• 
  The most notorious of these products were collateralized debt obligations
  

Find the true statement about Agency Problems in the Mortgage Markets.

• 
  This originate-to distribute business model was exposed to the principal–agent problem (in which the mortgage brokers acted as agents for investors (the principals) but did not have the investors’ best interests at heart)
  

“The rating agencies advised clients on how to structure complex financial instruments, like CDOs, while at the same time they were rating these identical products. The rating agencies were thus subject to conflicts of interest”. To which causes of the 2007–2009 Financial Crisis does this information relate to?