When the Value of Loans Begins to Drop,the Net Worth

question 39

Multiple Choice

When the value of loans begins to drop,the net worth of financial institutions falls causing them to cut back on lending in a process called

• A)deleveraging.
• B)releveraging.
• C)capitulation.
• D)deflation.

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Definitions:

Ratio

A quantitative relationship between two numbers, often used in financial analysis to assess the performance, liquidity, or solvency of a business.

Capital Account

In macroeconomics and international finance, a component of the balance of payments that records all transactions involving the purchase or sale of assets.

Ownership Interest

A stake or share in a company or asset, representing the rights and financial involvement of the owner.

Additional Partner

An individual or entity that joins an existing partnership, contributing capital and sharing in the profits and losses.