Banks can effectively improve their portfolios by:

Question

Quizplus · Accepted Answer

Increasing bond quality when quality yield spreads are low is a strategy that helps banks improve their portfolios. This is because it reduces credit risk while still providing an attractive yield. Shortening maturities might not always be beneficial, as it can also lead to lower yields. Obtaining less call protection might increase the risk of reinvestment at lower rates, and reducing diversification might concentrate risk in a single sector or asset class.

Banks Can Effectively Improve Their Portfolios By