This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse. In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies, which turned out to be adequate to what actually happened in 2006–2008.[citation needed] COUNT 5
QSN1 Which products created more complexity in the financial markets? ANS1 innovative financial products QSN2 What effect did the introduction of innovative financial products have on a single mortgage? ANS2 multiplied the number of actors connected QSN3 What did institutions rely more on as increasing distance from underlying assets occurred? ANS3 indirect information QSN4 What is a type of indirect information that financial institutions and investors used to judge the risk? ANS4 computer models of rating agencies QSN5 In what year did a group of computer scientists build a model for ratings produced by rating agencies that turned out to be accurate for what happened in 2006-2008? ANS5 2005