A bank might make mortgages to people in different regions of the country.By doing so
A)the bank reduces the risk it faces from falling house prices in its region and falling prices in all regions.
B)the bank reduces the risk it faces of falling house prices in its region but not from falling prices in all regions.
C)the bank reduces the risk it faces of falling house prices in all regions,but not the risk it faces from falling house prices in its regions.
D)the bank reduces neither the risk it faces from falling house prices in its region nor falling prices in all regions.

Question

Quizplus · Accepted Answer

By making mortgages in different regions of the country, the bank is diversifying its portfolio and reducing the risk it faces from falling house prices in its own region. However, it may still face the risk of falling prices in other regions due to economic factors that affect the housing market as a whole. Therefore, option B is the most accurate statement.

A Bank Might Make Mortgages to People in Different Regions