AIG almost went bankrupt in 2008 because
A) the value of the securities underlying its credit default swaps declined significantly.
B) it lacked the collateral required by buyers of its credit default swaps.
C) prices of securities underlying their credit default swaps were hard to determine since they were no longer actively traded.
D) all of the above.

Question

Quizplus · Accepted Answer

AIG almost went bankrupt in 2008 due to all of the reasons mentioned in options A, B, and C. The decline in the value of the securities underlying its credit default swaps, lack of required collateral, and difficulty in determining prices of securities were all major contributing factors to its financial troubles.

AIG Almost Went Bankrupt in 2008 Because