Which of These Is NOT a Way Financial Institutions Reduce

question 292

Multiple Choice

Which of these is NOT a way financial institutions reduce risk?

• A) performing credit checks on borrowers
• B) diversifying funds
• C) collecting information helpful for risk assessment
• D) guaranteeing a high rate of return for all lenders

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not expected to be converted into cash in the upcoming year.

Usefulness

The quality of being practical and beneficial, especially in decision-making or assessing value.

Prepaid Expense

Expenses paid in advance for goods or services, which are recorded as an asset until the service is consumed or the good is used.