Please see attached for reference information to be used to answer the following:
- 1) What forces contributed to the collapse of the two hedge funds?
- 2) What explains the rapidity of the decline in the hedge funds’ performance? Were the reasons unique to Bear Stearns or more widespread?
- 3) What steps could have been taken to address the problems created by the collapse of the two hedge funds?
- 4) What forces created the “systemic risk” in the financial system? How large was this risk?
- 5) What are the implications of the failure of independent investment banks, such as Bear Stearns, for the future business model of banking?
