A Bank Allows Us to Diversify Risk Because

question 148

Multiple Choice

A bank allows us to diversify risk because:

• A)it has a big pool of borrowers and savers,so the risk of repayment is spread among many.
• B)it has a small amount of borrowers,but many savers,so it can combine savings to make larger loans.
• C)it has a small amount of borrowers and savers,so it can connect the optimal saver to the best-matched borrower.
• D)it has a big pool of borrowers,but not many savers,so it can choose the riskiest person to borrow from.

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Definitions:

Multi-brand

A strategy where a company markets multiple brands within the same product category, offering diversity to consumers.

Private-label Brand

A brand owned by a retailer or supplier that is not manufactured by them but is sold under their own branding.

National Brand

A product or service that is widely recognized and available across a country, often produced by a company that invests in national marketing campaigns.

Manufacturer's Brand

Products branded and marketed by the manufacturer itself, as opposed to being sold under a retailer's brand.