Assignment:
Review study guide: International Business By A. J. Cataldo
Project Questions
1. Fannie Mae and Freddie Mac are GSEs. Define GSE witha brief explanation.
2. To slow the decline of market values of Fannie Mae,
Freddie Mac, and 17 other financial firms, the Securitiesand Exchange Commission (SEC) suspended naked shorting for a short period.
a. What is a long position in a stock?
b. What is a short position in a stock?
c. What is a naked short position in a stock?
(Distinguish between a short and a naked short.)
d. Are retail investors or traders permitted to nakedshort a stock?
e. Who is permitted to naked short a stock (assumingthere has been no suspension of this practice)?
3. a. Following the first SEC suspension of naked shorting(post-June 2008), did other nations follow this practice?
b. If not, explain why. If so, list a few.
4. When the temporary suspension of naked shorting wasimposed by the SEC, stock prices increased, due to a"short squeeze." Explain the term "short squeeze."
5. The problems with Fannie Mae, Freddie Mac and otherfinancial institutions were said to have been caused bythe securitization of risky mortgages issued to uncreditworthy borrowers along with credit default swaps toinsure these risky mortgages.
The credit default swapsweren't capitalized-there was nothing available to payoff on these credit default swaps, so when the borrowe rdefaulted on the mortgage and the credit default swapwas to be "cashed in," there was nothing available andthese securitized mortgages became worthless.
a. Worldwide, what's the approximate value of creditdefault swaps in circulation during this period?
b. How did this amount compare to U.S. and worldwidegross domestic product (GDP) during this period?
6. a. In what currency is oil traded?
b. In what currency are credit default swaps traded?
7. a. Will the U.S. dollar remain the currency of choice?
b. Have any nations called for a switch from the U.S.dollar?
1. Type your submission, double-spaced, in a standardprint font, size 12. Use a standard document format with1-inch margins.