The Impacts of Subprime Mortgage Loan Storm on the Investors’Equity

• Main Authors: Wen-Pi Lin, 林文筆
• Other Authors: Ching-Hsiang Lin
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/33836782850185146070

碩士 === 國立高雄第一科技大學 === 財務管理所 === 97 === ABSTRACT The Federal Reserve Board (Fed) cut the Fed Funds Rate from 6.5% in 2000 down to 1% in 2003, and that caused the prosperity in the subprime mortgage. The banks in Taiwan began to introduce the Structured Note which was issued by the well-known banks from other countries. These banks promoted the Structured Note to their customers, and boosted the product with breakeven, low risk and high profit. The Fed started to raise the interest rate in 2004, and the high rate made the customers of mortgage unable to afford the interest. Eventually, Lehman Brothers, an investment bank of The United States, went bankrupt on Sep.15 2008. The reason is that it’s huge loss in mortgage business and investment of Mortgage Backed Securities (MBS) and Collateralized Debt Obligation (CDO). This event shows the possibility that the Structured Note which had been issued and guaranteed by Lehman Brothers might become nothing. Probes of Structured Note and CDO in literatures around the world mostly focus on evaluation parts, but hardly mention about that the equity of investors which got a lot of loss caused by the bankruptcy of Lehman Brothers. Consequently, an example that a bank in Taiwan sold a Bull Hign Yield Note (Bull HYN) which was issued and guaranteed by Lehman Brothers would be used in this thesis to explain various risks and relative problems of investing Structured Note. In addition, introspection of the storm, and measures against the storm in every country are also discussed in this thesis. Finally, opinions and suggestions for investors in Taiwan, wealth management departments of banks, and the financial regulators would be given, and further, they would be expected to lead investors to develop a correct concept of investment, and have some contributions toward the future of wealth management departments of banks and the improvement of financial supervisory system.