Which of these is NOT a way financial institutions reduce risk?
A) performing credit checks on borrowers
B) diversifying funds
C) collecting information helpful for risk assessment
D) guaranteeing a high rate of return for all lenders

Question

Quizplus · Accepted Answer

Guaranteeing a high rate of return for all lenders would actually increase the risk for financial institutions, as it may force them to make riskier investments to meet those guarantees. Therefore, this is not a way that financial institutions reduce risk. The other options (performing credit checks, diversifying funds, and collecting information for risk assessment) are all common methods for reducing risk in financial institutions.

Which of These Is NOT a Way Financial Institutions Reduce