Anyone think subprime might be a hot topic for the exam given the turn of events in recent months? Any thoughts on the advantages/ disadvantages of nationalisation of a bank in trouble and the issues to consider OR why would a private company be interested in it?
Would have thought it's more likely to come up in SA5 rather than ST5, but that is based on pure gut feel (and the fact that SA subjects come with a suggestion to stay abreast of topical issues, which ST subjects don't) but perhaps not a bad idea to have a broad idea of the risks involved with re-packaging a bunch of bonds / obligations into a different structure for example, say collateralised mortgage obligations and what would happen if you then went on to re-package the CMO's into another set of synthetic bonds... PS - the bank in question had problems because they borrowed funds to lend to consumers through mortages, and their source of funds dried up (i.e. credit crunch not subprime) - the rock mortgages here were probably perfectly normal, healthy mortgages and not the source of the problem - irrelevant to comments above but important if you want to use it as an example in the exam...
