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Fin 350 Investment Analysis

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Subject
Economics
School
Carlos Albizu University - Miami Campus
Type
Homework
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Running Head: THE BIG SHORT 1
Title: The Big Short
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THE BIG SHORT 2
The Big Short
The Big Short is a film that was released in the year 2015. It is a story about the financial crisis
that hit the world economy in the year 2008 that came to be known as the Great Recession. The Great
Recession was caused by the collapse of the credit bubble and housing bubble. The film tries to explain
the financial instruments that were engineered by financial institutions that led to the mortgage meltdown
in 2008. Though the movie is portrayed in a comical way, complex financial terms are explained to make
it as much educational as it is entertaining. Some of the tools explained are mortgage-backed securities,
tranches, collateralized debt obligations, and credit-default swaps (McKay, 2015).
Collateralized debt obligations is explained where blackjack is played by Selena Gomez. This
concept is explained by Economist Richard Thaler. It explains how the larger side bets that are
consistently increasing are great when there is winning (McKay, 2015). With the failing of housing
markets, the larger side bets set out a chain of events that lead to larger losses to the whole economy.
Tranches are explained using pulling of blocks from the Jenga Tower where Jared Vennett pulls
out blocks in the lower parts of the tower. This explains the concept of tranches that the highly rated
securities that are represented by the blocks in the upper part of the tower cannot stand when the lower
rated securities fail (McKay, 2015). This means for the market to excel, both the top-rated securities and
the low-rated ones need to be available.
Mortgage backed securities are explained using several visual cuts. A two day fish being tossed
into a stew by Anthony Bourdain is used to give an explanation of how risky subprime mortgages are
tossed into collateralized debt obligations in order to hide how risky they are to unsuspecting customers
(McKay, 2015).
I would recommend the film to anyone who would like to get deeper knowledge of the Great
Recession and how the greed of Wall Street led to the sinking of the global economy for many years.

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Running Head: THE BIG SHORT 1 Title: The Big Short Student's name: Course title: THE BIG SHORT 2 The Big Short The Big Short is a film that was released in the year 2015. It is a story about the financial crisis that hit the world economy in the year 2008 that came to be known as the Great Recession. The Great Recession was caused by the collapse of the credit bubble and housing bubble. The film tries to explain the financial instruments that were engineered by financial institutions that led to the mortgage meltdown in 2008. Though the movie is portrayed in a comical way, complex financial terms are explained to make it as much educational as it is entertaining. Some of the tools explained are mortgage-backed securities, tranches, collateralized debt obligations, and credit-default swaps (McKay, 2015). Collateralized debt obligations is explained where blackjack is played by Selen ...
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Anonymous
Really useful study material!

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