Toxic assets are those whose value is so uncertain that there is no func...

Suggestion by 71.252.80.150 on 2009-04-12 17:26:23

Toxic assets are those whose value is so uncertain that there is no functioning market for them (i.e., the market is very illiquid), and what market there is provides bids much lower than the holder is asking. Sale under those conditions (i.e., at a low bid in an illiquid market) would form a comparison point for mark-to-market writedowns of similar assets, which in turn could cause breech of regulatory requirements or loan covenents. Hence, the toxicity part of toxic assets is in part derived from the secondary effects of selling them.

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