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Background: In the financial marketplace, new buzzwords have been popping in recent years all over the media, including in TV talk shows and newspaper articles. Two phrases in particular, “toxic debts” and “toxic assets,” have received a lot of attention in the financial world. Both terms were originated in the US and first appeared as early as in 2006. Toxic debts and assets refer to non-performing assets or non-performing loans. In other words, the assets or loans do not yield or generate income for the lender, and people who received the loan do not have the means to repay the loan. These assets were once valuable but later lost this value or became completely worthless because of the financial crisis. Because these assets are no longer valuable, they became “toxic” to the bank. Toxic debts and assets corrodethe bank’s inherent value and, comprise its ability to make loans to consumers. If such a vicious cycle were to continue, the bank eventually would not be able to survive. How could this ever happen? ___________________________________________________ Tom: How could toxic debts or assets ever happen in America? Tina: Toxic debts or assets occur for many reasons. I am sure you know that toxic assets are acquired or purchased at prices that do not actually reflect the real value of the properties. Tom: So, in other words, the properties were sold undervalued? How could this happen? | 
