7-49 During a liquidity crisis assets normally must be sold at a loss because of the rising interest rates caused by financial institutions attempting to raise funds.

Question

Quizplus · Accepted Answer

During a liquidity crisis, financial institutions may attempt to raise funds by increasing interest rates. This can lead to a situation where assets must be sold at a loss in order to meet the need for cash. Therefore, the statement is true.

7-49 During a Liquidity Crisis Assets Normally Must Be Sold