This objective of this report is to analyse and evaluate the financial data of Merrill Lynch through 2006, 2007 and 2008. It also looks at the developments in the financial markets during these years and its impact on Merrill Lynch, a what-if analysis of the possible financial performance that might have existed had the economic downturn not occurred and in the end summary and conclusions based on the findings.
Introduction to Merrill Lynch
Merrill Lynch is one of the world’s premier providers of wealth management, securities trading and sales, corporate finance and investment banking services. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill …show more content…
Mounting losses and the difficult market situation had pushed it to the brink of a collapse. Its actual losses were turning out to be significantly more than what had been anticipated earlier in the year. Its own losses combined with the Wall Street crisis had made its stock price plummet to a closing price of $17.05 on Sept 12th 2008 at which point the company’s existence appeared to be in danger.
Developments in the financial markets during the years 2006, 2007 and 2008
The global recession of the late 2000s was a mix of economic and legal factors which brought about turmoil in the investment banking industry.
The entire world’s economy was hit by a severe global recession in the late 2000s which came to be called as The Great Recession. This financial crisis is linked to the irresponsible and risky lending practices by the financial institutions. The US mortgage backed securities which had risks that were hard to assess were marketed around the world.
What exactly was the credit crisis?
It was a world-wide financial debacle involving sub-prime mortgages, Collateralized Debt Obligations (CDOs), Frozen Credit Markets and Credit Default Swaps. Everyone was affected by this crisis. Here’s how it began;
The credit crisis brought two groups of people together; Home-owners and investors. Home owners represented their mortgages and investors represented their money. These mortgages represented houses and this money