Term Paper (4pages) - John Paulson, Goldman Sachs and Abacus 2007 AC1

(4pages) - John Paulson, fortunateman Sachs and Abacus 2007 AC1 - Term Paper Example ascribable to imperfect information Goldman comes in with the knowledge of a German bank which is in the position of demoralise the risk that Paulson is exposed to as Paulson looks for a short. This bank is only able to buy the securities if the if they can be introduced by an external party. Goldman is still having the information that not every manager would not be impulsive to work with Paulson this is because of the risk exposure and public complaint directed towards Paulson. With every(prenominal) this information, Goldman approaches ACA management bank for policy brokerage. Successfully the bank accepts be become the manager in the deal of which it would assist Paulson in the excerpt of securities (Cohan and William, 27).By February 2007 Paulson had reached an agreement after working on a portfolio, they signed the agreement the same year. Gold man being behind all these does not reveal a ny information to anyone about the exponentiation of ACA and Paulson in the deal and the deal therefore remains a secret. The information that Paulson is engaged in an insider employment hence is shorting the securities also remains a mystery. Goldman had vast information including hat Paulson is planning to hold the riskiest of all the securities of ACA is also aware of, all these are based on the complaints presented (Cohan and William, 123).Gold man swiftly puts together a deal branded as Collateral Debt Obligation, this deal is designed with a major(ip) objective of enabling Paulson to receive the exposure to the fulfilment which they want it. In addition, the deal also coves the extent of IKBs risk exposure extent is reached. In following of this, IKB takes a share of the deal of $ one hundred fifty million and this is the extent of risk to which it is exposed, another firm takes a risk up to $909 million. Both of the forms buy a protection to the extent of its