Read the article titled how Debt Markets Have Malfunctioned in the Crisis and focus on how during a period of financial crisis when funds cannot be raised easily or quickly, the fundamental values of some assets can depart from market prices. Explain how
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Read the article titled how Debt Markets Have Malfunctioned in the Crisis and focus on how during a period of financial crisis when funds cannot be raised easily or quickly, the fundamental values of some assets can depart from market prices. Explain how this relates to the distinction between loans and securities. Identify consequences that can be transmitted to the real economy. Comment on government policy initiatives, either specifically or in relation to their general function in the context described. Do you agree with this author on the beneficial effects of policy interventions during the period of financial crisis discussed? Respond to your peers’ assessments of the beneficial or detrimental effects of policy interventions. Do you believe that these policy interventions will continue to be significant in ensuring against systemic risk?
