Hoofdstuk 5 Business The financial crisis

Question 1

subprime mortgage

Answer 1

A home loan given to people who are not creditworthy.

Question 2

foreclosure

Answer 2

When a homeowner can’t pay back his debt and the bank becomes the owner of the house.

Question 3

Collateral

Answer 3

Something valuable (like a house or car) that you give as a guarantee when you take a loan.

Question 4

CDO (Collateralized Debt Obligation)

Answer 4

A financial product made by combining many loans (like mortgages) into one package.
Then this package is sold to investors.

Question 5

leverage

Answer 5

Using borrowed money to try to make a bigger profit from an investment.

Question 6

Treasury bill

Answer 6

A very safe investment from the US government. because it’s so safe, it usually gives low interest (low profit).

Question 7

Federal reserve

Answer 7

The central bank of the USA. It’s used by banks and the government, not by regular people.

Question 8

Default

Answer 8

When someone fails to pay back a loan as agreed.