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Questions and Answers
How was the asset bubble created?
The asset bubble was created through a combination of factors such as excessive speculation, easy credit availability, and investor optimism. These factors led to an inflated demand for assets, driving up their prices to unsustainable levels.
What was the impact when the asset bubble burst?
When the asset bubble burst, it led to a sharp decline in asset prices, causing significant financial losses for investors and financial institutions. This resulted in widespread economic downturn, increased unemployment, and a subsequent global financial crisis.
What instruments were used in the creation of the asset bubble?
Various financial instruments were used in the creation of the asset bubble, including mortgage-backed securities, collateralized debt obligations (CDOs), and credit default swaps (CDS). These instruments allowed for the bundling and trading of risky assets, further fueling the bubble.
