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Why Didn't Investors Caught in the Subprime Lending Crisis Take

question 13

Multiple Choice

Why didn't investors caught in the Subprime Lending Crisis take earlier note of the risks inherent in investments known as collateralized debt as obligations (CDOs) ?


Definitions:

Ringlemann Effect

The phenomenon where individual effort tends to decrease as group size increases, often due to coordination and motivation problems.

Work Less Hard

A reduction in the effort or intensity with which an individual or group engages in their tasks or duties.

Risky Decisions

Choices made under conditions of uncertainty, where outcomes can include significant losses or gains.

Destination Contract

A shipping agreement where the seller is obligated to deliver goods to a specific destination, with the seller bearing risk and cost until delivery.

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