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Buzz Words of the Credit Crisis Defined

We decipher the lingo surrounding credit problems.

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These days, an investor practically needs a financial dictionary to read The Wall Street Journal. With credit problems occurring in areas most people have never heard of, we thought we would provide our readers with definitions for the buzz words or abbreviations commonly found in the papers.

Although some of these terms have been in the news for several months, others are new and could warn of lasting damage. The CDOs, RMBSs, and Alt-A mortgages have already caused tremendous damage, and we are carefully monitoring the ARS, CDS, and CMBS markets for additional weakness that could lead to a second series of costly write-offs among banks. Despite the aggressive actions by the Federal Reserve and even Congress, the danger in the financial services landscape remains.

Jaime Peters does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.