A Vicious Cycle of Deleveraging Occurs When Sales of Assets

question 191

True/False

A vicious cycle of deleveraging occurs when sales of assets to cover losses produce negative balance sheet effects on other firms, causing creditors to call in their loans, which forces further sales of assets and further decreases in prices.

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Definitions:

Reasonable Care

The legally required level of care that an individual or organization must undertake to avoid negligence.

Medication

Any substance used to diagnose, cure, treat, or prevent disease or improve a condition or symptom.

Paperwork

Written or printed documents, forms, or records that are used for organizing, recording, or communicating information.

Risk Management

The identification of all exposure to financial loss of a business and includes the selection of techniques to manage those exposures; The Joint Commission defines risk management in health care as “clinical and administrative activities undertaken to identify, evaluate, and reduce the risk of injury to patients, staff, and visitors and the risk of loss to the organization itself.”