The difficulty many investors experienced in selling mortgage based securities during the financial crisis of 2009 is an example of
A) business risk.
B) credit risk.
C) market risk.
D) liquidity risk.

Question

Quizplus · Accepted Answer

The difficulty in selling mortgage based securities during a financial crisis is a result of liquidity risk. This refers to the risk that an investor may not be able to sell an asset, such as a security or bond, in a timely manner without having to sell it at a significantly reduced price. The financial crisis of 2009 resulted in a lack of willing buyers and a decrease in demand for mortgage based securities, causing investors to struggle to sell their assets.

The Difficulty Many Investors Experienced in Selling Mortgage Based Securities