Financial Services and the Global Economy
Not what you're looking for?
Please read the articles that I attached and help me to solve the questions.
How JPMorgan Lost $2 Billion Without Really Trying
1. Describe how the operating strategy of the Chief Investment Office changed over the past five years.
2. What financial instrument created the losses for JPMorgan?
3. What were the flaws in JPMorgan's trading approach that exacerbated the losses?
4. Who was the London Whale?
Something's Rotten in Banking - and It's Not Just Barclays (editorial)
1. Why is an accurate LIBOR essential to the global economy?
2. What is your collective emotional reaction to the contents of the email exchanges included in the editorial?
3. Do you agree with the editorial's conclusion?
For Bankers, the Thrill is Gone
1. What insights should auditors in financial services take from this article?
2. Are you sympathetic to the traders' current plight?
Purchase this Solution
Solution Summary
The solution discusses the financial services and the global economy.
Solution Preview
How JPMorgan Lost $2 Billion Without Really Trying
1. Describe how the operating strategy of the Chief Investment Office changed over the past five years.
Banks' Chief Investment Office had the responsibility of managing excess cash and some investments. Mission of the Office was to protect JPMorgan from banking risk inherent in the industry like interest rate risk and currency fluctuations. In 2011 JPMorgan had betted for credit conditions to worsen and profited from it. However situation changed in early 2012 when Chief Investment Office started making offsetting bullish bets by selling credit insurance using a markit CDX index. The index reflects the price of credit-default swaps on 121 companies that had investment grade ratings when the index was created in 2007. The Office sold insurance on the index using contracts that expired in 2017. It also bought insurance on index using contracts that expired in 2012. This was a good strategy as long as spread between prices of two contacts remained stable. However the volume in which transactions were done was so large that it was driving financial health of entire company. The strategy of making profit became so big that market was getting affected. Hence the strategy of the Office changed from being protective and making small bets to becoming moving the market through their activities.
2. What financial instrument created the losses for JPMorgan?
A series of derivative transactions including Credit Default Swaps were entered into by the bank as a part of its hedging strategy. CDS were responsible for financial crisis of 2008 and were originally used to hedge bank's exposure to other instruments it ...
Purchase this Solution
Free BrainMass Quizzes
Operations Management
This quiz tests a student's knowledge about Operations Management
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations