One reason for financial problems of securities firms during the credit crisis is that they used a high degree of financial leverage.

Question

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Securities firms typically use financial leverage to increase their returns on investments, but it also increases their risk. During the credit crisis, many securities firms had invested heavily in mortgage-backed securities and other risky assets that became unprofitable, causing their leverage to work against them and ultimately leading to financial problems.

One Reason for Financial Problems of Securities Firms During the Credit