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The Lehman Brothers Collapse Who, Why, How and Its Long-term Effects on Securities Markets
Finance & Accounting
Pages 10 (2510 words)
The Lehman Brothers Collapse Who, Why, How and Its Long-term Effects on Securities Markets By: Student Name University Submitted to: Date The Lehman Brothers Collapse Introduction The Lehman Brothers Collapse during the 2008-09, period is believed to be a very significant as well as interesting topic in the field of Finance as it illustrates the financial blunders committed by the management of the company alongside its long term effects on securities markets.
There are a few terms which need to be defined before proceeding further. Security markets are the markets where securities of different types are bought and sold with reference to demand and supply. Mortgage markets involve dealings of loans on housing, business and industrial real estates. The markets in which corporations raise new capital by issuing common stock are referred to as primary markets. Secondary markets on the other hand are the ones where formerly issued securities are bought and sold among the investors, with no direct involvement of the corporations. Leverage is usually referred to borrowing. Stockholders are those who buy shares of a company, thereby gaining the rights of votes, earning dividends and profits. In a dramatic manner, Lehman Brothers underwent the largest bankruptcy in the history of United States, with its stocks plummeting drastically, customers opting their way out and assets being heavily undervalued by the official credit rating groups of that time. Lehman Brothers was mutually established by the three brothers, Henry Lehman, Emanuel Lehman and Mayer Lehman. Since its foundation, it was considered to be a very reputable institution in which people used to place immense amount of trust. ...
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