The Michelson Bank of Stetson,wants to protect itself from risk.It decides to make loans in Florida,Georgia,Texas,and Oklahoma as well as invest in municipal bonds from California and Oregon.What defense against risk is this bank making?
A)Portfolio diversification
B)Geographic diversification
C)Quality management
D)Increasing owners' capital
E)None of the options is correct.

Question

Quizplus · Accepted Answer

The bank is spreading its investments and loans across different geographic locations, which is a strategy known as geographic diversification. This helps in reducing the risk that comes from economic downturns or natural disasters affecting a single region.

The Michelson Bank of Stetson,wants to Protect Itself from Risk