In a vicious cycle of deleveraging, financial institutions:
A)sell assets at a deep discounts.
B)sell assets at unreasonably high prices.
C)offer higher interest rates to their depositors.
D)buy assets at unreasonably high prices.

Question

Quizplus · Accepted Answer

In a vicious cycle of deleveraging, financial institutions are forced to sell assets at a deep discount to raise cash in order to pay off debts. This can lead to a downward spiral as the sales of these assets can trigger a wider market sell-off, leading to further declines in prices and reductions in value for financial institutions' holdings.

In a Vicious Cycle of Deleveraging, Financial Institutions