One way for a bank to deal with credit risk is to:
A. increase the number of loans made in any year.
B. add a mark-up for a specific borrower based on the borrower's credit history to the cost of funds.
C. charge all borrowers from the same industry an average rate for that industry.
D. avoid making loans to borrowers from a broad spectrum and to specialize geographically and in specific industries.
Answer: B
You might also like to view...
What is the free-rider problem? What results from the free-rider problem? What is a solution to the free-rider problem?
What will be an ideal response?
The rate-of-return line ________ when the interest rate rises
A) shifts to the right B) shifts to the left C) pivots to become steeper D) pivots to become flatter E) is not affected
If a firm in a perfectly competitive market is producing at a level of output where marginal costs are less than marginal revenue, its profit:
A. must be positive. B. are maximized. C. will increase if it produces less. D. will increase if it produces more.
Which statement is true?
A. More than any other region in the nation, the South prospered the most in the years following the Civil War. B. The transcontinental railroads that were completed in the 1860s, 1870s, and 1880s, all bypassed the South. C. Before the Civil War most of the nation's large farms were located in the North. D. None of the choices are true.