4.) The credit crisis, as we saw, was rooted in thousand of subprime home loans - loans made to people with poor credit records, which had adjustable vs. fixed interest rates, and which consequently stood a very high likelihood of default.
These subprime loans formed a foundation of financial like CDOs, which were sold to large global investors. Explain the role of credit-rating agencies played in misrepresenting the RISK inherent in these products. Also explain the nature of their relationship with both sellers and buyers of CDOs.