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

Question

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 an 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 orders t 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 loan with some creditors.

Answer 1

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