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:

Legal Entity

An organization with legal rights and obligations, such as a corporation, partnership, or sole proprietorship.

Nonstock Companies

Companies organized not to issue stock to the public, often structured to provide a service or benefit without profit motive.

Privately Held

A company ownership structure where its shares are not traded on public stock exchanges and are instead owned by a smaller number of private investors.

Foreign Corporation

A corporation that is incorporated under the laws of a country different from the country where it conducts its operations.