I want to know the answer to the following question:
What financial innovation allows investment banks and hedge banks to make large wagers?
All the background I'm provided with is that "" Essentially, investment banks and hedge funds used financial innovation to enable large wagers to be made, far beyond the actual value of the underlying mortgage loans, using derivatives called credit default swaps, collateralized debt obligations and synthetic CDOs.". Is that enough to answer the question?
Answer: yes