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Business, 21.04.2020 15:47 booitsmrradl3385

Suppose that as a result of a housing price decline, the value of the bank's securitized assets falls by an uncertain amount, so that these assets are now worth somewhere between 25 and 45. Call the securitized assets "troubled assets." The value of the other assets remains at 50. As a result of the uncertainty about the value of the bank's assets, lenders are reluctant to provide any short-term credit to the bank.

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Suppose that as a result of a housing price decline, the value of the bank's securitized assets fall...
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