Banks minimize the risk of loss to depositors by

Question

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By making many different loans to different borrowers, banks can diversify their risk and minimize the likelihood of significant losses from a single borrower defaulting on a loan. This is a common risk management strategy used by banks to protect the funds of their depositors. Lending to casino owners (A) may be considered a high-risk investment, as it is often associated with a higher probability of default. Refusing to lend money to the U.S. government (C) is not a common practice for banks and may limit their potential investment opportunities. Putting all their eggs in one basket (D) and making very long-term loans (E) would increase the potential risk for the bank and its depositors.

Banks Minimize the Risk of Loss to Depositors by