Question

Examine the stock market changes in the recent years, especially after the credit crisis in 2007-08. What has happened to the stock market? Do you find the market volatile?

Answer 1

The financial crisis in 2007-08 is the major downfall of trust that happend between the banks the before 2008 financial crisis year. It was happed by the mortgage crisis called as subprime mortgage, which was happend by the uncontrolled use of the market security derivatives. This timeline also involves the early warning signs,and signs of downfall.

In February 2007 the homes which are in existence that sales goes up at an yearly rate of 5.79 million. Prices had begun decreasing in the month of July 2006, when they went upto $230,400. Some also said that it was due to the Federal Reserve had just increased the federal funds amoun rate to 5.25 %. In January 2007, new homes prices peaked at $254,400.

And, with the bankrupcy of Bear Stearns company due to big losses due to its participation in having underwritten many of the investment channels directly connected to the sub-prime market of mortgage. Homeowners were not paying and defaulting at very high rates as all the different variety of sub-prime mortgages were subject to higher payments while home prices decreased and due to the defaults by the lenders the stock market dropped more than 600 points and which is all time high of 12,786 on February 20.