Which of the following may occur when a sufficient number of borrowers are unable to repay interest and principal on loans, thus causing an FI's equity to approach zero?

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Insolvency risk occurs when an FI's equity approaches zero due to a large number of borrowers unable to repay interest and principal on loans. This may lead to the FI becoming insolvent and unable to meet its obligations, potentially causing systemic risk. Sovereign risk refers to the risk of a government defaulting on its debt, currency risk refers to the risk of exchange rate fluctuations affecting international transactions, and liquidity risk refers to the risk of insufficient funds to meet obligations.

Which of the Following May Occur When a Sufficient Number