Which of the Following Observations Concerning Concentration Limits Is Not

question 22

Multiple Choice

Which of the following observations concerning concentration limits is not true?

• A)Limits are set by assessing the borrower's current portfolio, its operating unit's business plans, its economists' economic projections, and its strategic plans.
• B)FIs set concentration limits to reduce exposures to certain industries and increase exposures to others.
• C)When two industry groups' performances are highly correlated, an FI may set an aggregate limit of less than the sum of the two individual industry limits.
• D)FIs may set aggregate portfolio limits or combinations of industry and geographic limits.
• E)Bank regulators in recent years have limited loan concentrations to individual borrowers to a maximum of 30 percent of a bank's capital.