Remember: A loan is a promise to pay back, and a chain of promises is only as strong as its weakest link.
Read and answer
Read the story first, then answer.
The town of BricktonIn the made-up town of Brickton, new houses were going up everywhere, and prices kept rising. A house cost ten coins. Maya's family had saved only two, so they borrowed the other eight from the Lending House, a loan paid back a little at a time. Ana the lender lent to more and more families. Then she bundled many loans into one parcel and sold it to Cy, which gave her coins to lend again. Cy sold pieces of parcels on, until Brickton's loans sat in faraway places. Then house prices fell, and some families could not keep up their repayments. Maya's house was now worth only six coins, but the family still owed eight. Nobody knew which parcels held the shaky loans, so everyone doubted every parcel. Lenders stopped lending, even to each other, so lending froze. The same kind of thing happened for real in 2008, though many things played a part. Many people lost jobs, and it was a hard time for many families. Afterwards, new rules said lenders must check that a family can repay, and must keep more coins in reserve.
1
A house costs 10 coins and Maya's family saved 2. They borrowed coins from the Lending House.
2
Prices fall. The house is now worth 6 coins, and the loan is 8. What is true?
The house is worth more than the loanThe house covers the loan exactlyThe house is worth less than the loan
3
The house is worth coins less than the loan.
4
A parcel of loans is only as good as the loans inside it.
TrueFalse
5
What did Ana get when Cy bought her parcel of loans?
A new houseCoins to lend againNothing at all
Order, match and think
6
Number the steps of Brickton's story.
Lenders stop lending
Ana bundles loans into parcels
Prices rise and families borrow
House prices fall
7
Join each word to what it means in the story.
1loan
2parcel
3reserve
4lending froze
Amoney borrowed and paid back a little at a time
Bcoins a lender keeps for a rainy day
Cmany loans bundled into one
Dlenders stopped lending, even to each other
8
Circle every part of how the chain of loans broke.
House prices fellRain stopped the buildersShaky loans were hidden in parcelsFamilies stopped wanting homesEveryone doubted every parcel
9
Cy says: the crash had exactly one cause. Is Cy right?
YesNo
10
The dot is the real crash that this story is about. Which year is it?
192920081950
11
Why is a chain of loans only as strong as its weakest link?
Every loan is the same sizeTrouble in some loans passes along to lenders far awayLenders only lend to friends
12
Write one way the new rules try to keep loans safer.
13
Draw a chain of four links. Color the weakest link and say what happened to it.
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