risk inherent with financial innovation a variety of reasons approximately 32 cents on the dollar approximately five cents for every dollar $450bn
What did market participants fail to measure accurately? What are the reasons market participants did not understand the impact financial innovation products would have? How much did JPMorgan estimate was the average recovery rate for high quality CDOs that had been liquidated? How much did JPMorgan estimate was the average recovery rate for mezzanine CDOs that had been liquidated? How much did banks estimate was the value of CDOs sold between late 2005 to the middle of 2007?
For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its impact on the overall stability of the financial system. For example, the pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450bn of CDO were sold between "late 2005 to the middle of 2007"; among the $102bn of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for mezzanine CDO was approximately five cents for every dollar.
question: What did market participants fail to measure accurately?, answer: risk inherent with financial innovation | question: What are the reasons market participants did not understand the impact financial innovation products would have?, answer: a variety of reasons | question: How much did JPMorgan estimate was the average recovery rate for high quality CDOs that had been liquidated?, answer: approximately 32 cents on the dollar | question: How much did JPMorgan estimate was the average recovery rate for mezzanine CDOs that had been liquidated?, answer: approximately five cents for every dollar | question: How much did banks estimate was the value of CDOs sold between late 2005 to the middle of 2007?, answer: $450bn