f higher leverage is associated with greater risk, the process of deleveraging (reducing leverage) can be destabilizing. The problem arises if too many institutions try to

(Click to select)reduceincrease

their leverage at the same time. A large number of institutions

(Click to select)sellingbuying

assets will push

(Click to select)downup

asset prices. With asset values

(Click to select)fallingrising

relative to liabilities, net worth

(Click to select)fallsrises

,

(Click to select)increasingdecreasing

leverage and prompting further asset

(Click to select)salespurchases

, potentially destabilizing those markets. eBook & Resources eBook: Financial Markets