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The Practice of Keeping High-Risk Assets on a Bank's Books

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The practice of keeping high-risk assets on a bank's books while removing low-risk assets with the same capital requirement is known as


Definitions:

Diverse Securities

A variety of financial instruments that an investor holds, including stocks, bonds, and commodities, to reduce risk through diversification.

Portfolio Weight

The percentage composition of a particular holding in comparison to the total investment amount.

Portfolio Weight

The percentage composition of a particular holding in comparison to the total value of the investment portfolio.

Market Risk Premium

The incremental profit expected by an investor when they decide to hold a market portfolio with risk rather than secure, riskless assets.

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