Describe peloton liquidity crisis

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1. Summarize the CDO strategy deployed by Magnetar during 2007. How was this different from Peloton's strategy during 2007 and early 2008? How was it different from John Paulson's strategy? Although Magnetar's bet was relatively safe, how could it have lost money? Think of one way other than the one mentioned in the case. How could Magnetar mitigate this risk?

2. Describe Peloton's liquidity crisis, including UBS's role.

3. Describe the role of credit rating agencies in the CDO market.

4. What caused the 2007- 2008 financial crisis? Discuss the role that banks, rating agencies, investors, and others played in CDOs. What principal-agent problems existed? Why did so many astute investors not recognize these signs? What should be done to prevent this crisis from happening again?

Reference no: EM132909686

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