From the Perspective of the Lending FI, the Risk of a Well-Diversified

question 39

True/False

From the perspective of the lending FI, the risk of a well-diversified portfolio of loans should be less than weighted average risk of the individual loans.

---

Definitions:

Indorsement

A signature or annotation on a financial document, such as a check, that specifies the terms of transferring the document’s rights to another party.

Subsequent Holder

An individual or entity that acquires a negotiable instrument, like a check or promissory note, after it has been issued or transferred.

Transfer Warranties

Legal assurances given by a seller to a buyer regarding the title, quality, and condition of goods or property being sold.

Check-Collection

The process of receiving and processing checks to obtain payment from the banking institutions on which they are drawn.