In order to reduce risk and increase the safety of financial institutions,commercial banks and other depository institutions are prohibited from
A)owning municipal bonds.
B)making real estate loans.
C)making personal loans.
D)owning common stock.

Question

Quizplus · Accepted Answer

Ownership of common stock exposes financial institutions to market risk, which can lead to fluctuations in the institution's capital and potentially jeopardize its safety and stability. Therefore, commercial banks and depository institutions are prohibited from owning common stock.

In Order to Reduce Risk and Increase the Safety of Financial