Core reason for the problem :
Increasing speculation
→ Announced 8.31 Step
with emphasis on holding taxaxtion and
transfer income taxation
Lee's government finds reason of the uprising price of realestate in the inconsistency of supply and demand.
This policy also insists that the restrictions on realestate must be relaxed.
It tries pump-priming by supporting construction ind
Example of sub prime mortgage loan
House prices 2million won
1 million won my money and bank loans 1million to buy a house
If house prices rise 1million won
Maintain bank loans 1million won
Add of 1million money to 1 million won my money
Currently my money: my money : 2million won –bank loans : 1 million won = 1 million won
If house prices fall 1 million won
Maintain bank loa
II. What Are Credit Derivatives?
Derivatives are defined as the exchange or contract which has economic values deriving from the reference assets or index. According to their types, there are overall forward, future, option, and swap. Derivatives are the financial derivatives, which are enabled to trade in the market while consisting of separating the credit risk only to the holder of basic p
II. Yen carry trade
II. 1. What is Yen carry trade?
II. 1. (1) Typical meaning
The typical meaning is “borrowing at low interest rates in yen and using the loan to buy higher yielding assets elsewhere.” During the past decade, the trade has become a “staple” for many investors. One of the most popular forms of the strategy exploits the gap between US and Japanese yields. Anyone
II. 2. The progress of Yen carry trade
Since 1990s, Japanese government and central bank started lowering interest rate policies so that Yen carry trade has begun.
1) After Kobe Earthquake in 1995, the Bank of Japan lowers the interest rate at 1%. In 1997, as financial crisis in East-Asia was broadening, Yen carry assets were paid off. In addition, The sharp increase in foreign bank as