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The Big Short Movie - Questions

1. What was the main problem that triggered the great financial crisis of 2008?

It was due to the poor rating of the mortgage loans, it means, many loans were granted to many people and when people could no longer pay, the banks ran out of funds. As the banks are handled in the stock markets (dow jones, nasdaq) the investors did not want to risk and stopped investing. this caused an outflow of capital in the productive sector of the countries and everything becomes more expensive, jobs are lost, etc.

1. Explain what it is a CDO (Collateral Debt Obligation)

They are products that include several issues of different debt, but that can be traded in tranches or as a single fixed income product.

1. What was the financial instrument Dr. Michael Burry developed to make "The Big Short" against financial forecasts?

It was called credit default swap

1. What role did the rating agencies (Standard & Poor's, Moody's, Fitch) played in the collapse of the 2008 financial crisis?

The rating granted by these companies is a way for investors to be able to compare financial securities without having to have specific knowledge, they were subject to scrutiny after the mortgage crisis for granting investment grade ratings to securitized mortgages.

1. Which of the characters that appear in the movie, in your opinion, was the most intelligent in "The Big Short" against the financial system of the United States?

For me, it was Michael Burry. I liked how he had a different perseverance and how he said he "analyzed things from the outside".

1. Was there any concept that is explained in the movie that was not clear to you?

For me, the most difficult concept to understand was Collateral Debt Obligation

1. What is your personal opinion about the film?

I had already seen this movie previously, however, now that I can appreciate the content from a financial perspective, I find it very interesting how a crisis can be foreseen and that being a world power and the most important country in the world, The control of the credits has gone out of their hands besides that they have not realized the size of the crisis that was approaching them. It is also incredible the impact that the economic situation that exists in the United States has in the whole world, not only then but nowadays.

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