... Banking Leverage Investments CDOs “It was the best of times, it was the worst of times …” —Charles Dickens Magnetar Capital had returned 25 percent in 2007—only its third year in business. This return was achieved with significantly lower risk than the S&P 500. Investors...

... significantly increased its leverage over the same timeframe, going from a debt-to-equity ratio of 23.7x in 2003 to 35.2x in 2007. As leverage increased, the ongoing erosion of the mortgage-backed industry began to impact Lehman significantly and its stock price plummeted. Unfortunately, public outcry over...

... board, Parr allowed himself a moment of reflection. How had it all happened? An analysis of the fall of Bear Stearns facilitates an understanding of the difficulties affecting the entire investment banking industry: high leverage, overreliance on short-term financing, excessive risk taking...