question archive In the class we learned about the London Bridge analogy
In the class we learned about the London Bridge analogy
Subject:BusinessPrice: Bought3
In the class we learned about the London Bridge analogy. Use the London Bridge example to explain the following: a. The upper tranches of the CDOs were not safe even though investors thought they would be protected by the lower tranches. b. The sub-prime loans caused much more damage to the economy than most people (including the FED) originally thought. c. Many people on Wall Street wrongly trusted VAR (value at risk) models that were based on small samples, normal distributions, and historical correlations between assets.
