Risk in banking tends to be concentrated in a bank's loan portfolio.

Question

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Banking activities involve lending and other credit-related activities, which account for a significant portion of a bank's income. Therefore, risks in the banking sector are usually associated with potential loan defaults, which could result in significant losses for a bank. As a result, a bank's loan portfolio is often considered the primary source of risk in the banking sector.

Risk in Banking Tends to Be Concentrated in a Bank's