In standard circumstances a firm ________ when its ________. In financial markets this approach did not work following the ________.
A) files for bankruptcy; liabilities exceed its assets; collapse of Lehman Brothers
B) sells its assets at fire sale prices; profits are negative; AIG debacle
C) increases its risky holdings; revenues fall; volatility of exchange rates in Japan
D) borrows liquidity from the Fed; leverage ratio rises above 75; passage of the TARP legislation
E) outsources its labor; net revenues are negative; purchase of Merrill Lynch by the Bank of America

Question

Quizplus · Accepted Answer

In standard circumstances, a firm files for bankruptcy when its liabilities exceed its assets. However, in financial markets, this approach did not work following the collapse of Lehman Brothers. This resulted in a need for government intervention through the Troubled Asset Relief Program (TARP) to prevent the collapse of other financial institutions.

In Standard Circumstances a Firm ________ When Its ________

In Standard Circumstances a Firm When Its