Answer: Subprime mortgage defaults → Collapse of Lehman Brothers → Global credit crunch → Stock market crash → Sovereign debt crisis in Europe

## Explanation The correct sequence of events during the 2007-2009 financial crisis is: **1. Subprime Mortgage Defaults (2006-2007)** - The crisis originated with rising defaults on subprime mortgages in the U.S. - Triggered by declining home prices and risky lending practices **2. Collapse of Lehman Brothers (September 2008)** - The failure of this major investment bank escalated the financial turmoil - Highlighted systemic risk in financial markets **3. Global Credit Crunch (Late 2008)** - Lehman's collapse caused interbank lending to freeze - Banks became reluctant to lend to each other, creating a liquidity crisis **4. Stock Market Crash (Late 2008-2009)** - Investor panic led to sharp declines in global stock markets - Reflected fears of prolonged recession and systemic failures **5. Sovereign Debt Crisis in Europe (2010-2012)** - Aftershocks of the financial crisis and fiscal stimulus strained public finances - Particularly affected Greece, Portugal, and Ireland This sequence shows the progression from the initial housing market problems through the banking crisis to the broader economic and sovereign debt consequences.

Author: Tanishq Prabhu