2-26 The use of off-balance-sheet activities and instruments will always reduce the risk to a bank.

Question

Quizplus · Accepted Answer

The use of off-balance-sheet activities and instruments may not always reduce risk. In fact, it can increase risk if not managed properly, as these activities and instruments often involve complex and volatile financial instruments such as derivatives. Additionally, off-balance-sheet activities can hide a bank's true level of risk-taking and financial health from regulators and investors.

2-26 the Use of Off-Balance-Sheet Activities and Instruments Will Always