Insolvent banks
A) have liabilities that are greater than their assets.
B) have loan values that are too low compared to what they owe their depositors.
C) have on some occasions been recapitalized by the Treasury.
D) Each of these answers is correct.

Question

Quizplus · Accepted Answer

Insolvent banks have liabilities that are greater than their assets, which means that they owe more than what they own. This can be due to various reasons such as bad loans, poor management, or economic downturns. In some cases, insolvent banks have been recapitalized by the Treasury, which means the government injects money into the bank to keep it afloat. Hence, all three choices A, B, and C are correct.

Insolvent Banks