Market Graphic - Subprime haircuts

The ignominious near-implosion of Bear Stearns' Enhanced Leverage fund has prompted much concern about the vulnerability of other funds with exposure to subprime and CDOs of ABS (collateralised debt obligations of asset-backed securities). Near term, the biggest risk is probably that of forced selling driven by potential margin calls (haircut increases) or investor redemptions.

Although the strategies that Bear employed - buying highly illiquid assets with only short-term investor lock-ins, a

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