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Credit Risk Diversification of a Loan Portfolio Occurs When

Question 59

Multiple Choice

Credit risk diversification of a loan portfolio occurs when:


A) loans from similar borrowers are combined in a portfolio.
B) loans with similar payment patterns are combined in a single portfolio.
C) adding loans to the portfolio decreases the variability of the loan portfolio.
D) adding loans to the portfolio increases the variability of the loan portfolio.

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