A newspaper article in the fall of 2007 reported stated that: "The luxury-home builder Hovnanian Enterprises reported its fourth consecutive quarterly loss on Thursday, citing continuing problems of credit availability and high inventory." Source: "New Loss for Home Builder," Associated Press, September 7, 2007. Hovnanian was suffering losses becauseA. they were cited for using faulty building materials from China. B. the CEO unwisely expanded into metals which reduced the profits of Hovnanian Enterprises. C. the economy was slowing down and about to head into a severe recession. D. the cost of production skyrocketed as more buyers were flipping houses for a quick profit.

Question

Business

Louis Whitehead

28 February, 04:15

A newspaper article in the fall of 2007 reported stated that: "The luxury-home builder Hovnanian Enterprises reported its fourth consecutive quarterly loss on Thursday, citing continuing problems of credit availability and high inventory." Source: "New Loss for Home Builder," Associated Press, September 7, 2007. Hovnanian was suffering losses becauseA. they were cited for using faulty building materials from China. B. the CEO unwisely expanded into metals which reduced the profits of Hovnanian Enterprises. C. the economy was slowing down and about to head into a severe recession. D. the cost of production skyrocketed as more buyers were flipping houses for a quick profit.

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Answers (1)

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Mendoza · Answer 1

c The economy is slowing down and headed towards recession

Explanation:

The global rating agency downgraded many home builders including Hovnanian and cited problems in the mortgage market. The financial crisis of 2008/9 was triggered by slump in mortgage market. The sales result of Hovnanian indicates decline in home sales. There seems to be a liquidity squeeze as banks stopped new lending for mortgages.