The process of asset transformation refers to the conversion of
A)safer assets into risky assets.
B)safer assets into safer liabilities.
C)risky assets into safer assets.
D)risky assets into risky liabilities.

Question

Quizplus · Accepted Answer

Asset transformation typically involves converting risky assets into safer assets. This is a common practice in financial institutions like banks, where they take in deposits (which are liabilities to the bank but are considered safe to the depositor) and then lend that money out as loans or invest in other assets that are inherently riskier. The process involves managing the risk to ensure that the assets are safer for the bank's stakeholders, including depositors and investors.

The Process of Asset Transformation Refers to the Conversion of