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Question: Which of the following are not examples of a vicious cycle of deleveraging? Explain.

a. Your university decides to sell several commercial buildings in the middle of town in order to upgrade buildings on campus.

b. A company decides to sell its large and valuable art collection because other asset prices on its balance sheet have fallen below a critical level, forcing creditors to call in their loans to the company because of provisions written into the original loan contract.

c. A company decides to issue more stock in order to voluntarily pay off some of its debt.

d. A shadow bank must sell its holdings of corporate bonds because falling asset prices have led to a default on the terms of its loans with some creditors.

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Accounting Basics, Accounting

Category:- Accounting Basics
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