I’m studying and need help with a Business question to help me learn.
NAKED SHORT SELLING
The declining values in Fannie Mae and Freddie Mac stocks
in 2007–2008 were the result of risky mortgages and foreclo-
sures. This led to a surplus of declining real property values
in the United States and a significantly negative impact on
equity prices and financial markets in the United States and
around the world. It’s likely that this topic will be studied
for many years, as Alan Greenspan, former Federal Reserve
Chairman, has referred to it as a once-in-a-century “financial
On the following page are graphic representations of the stock
price per share for Fannie Mae (FNM) (Figure 1) and Freddie
Mac (FRE) (Figure 2), the holders of approximately 50 percent
of the mortgages in the United States.
Read the boxed article, “Reinflating Real Property Values,”
by A. J. Cataldo and Anthony P. Curatola, from Strategic
Finance, October 2008. Then respond to the questions that
follow. Feel free to use Google, Wikipedia, or any other reliable
Internet sources for your research. Be sure to verify your
answers by checking multiple sources.