New One Goal, Three Exams: Strategies for Mastering RBI, SEBI, and IFSCA Exams
Register

Question

XYZ Bank Ltd specializes in granting loans to firms in a specific line of business. Which of the following is true in this case?

A Bank would decrease its operating cost and decrease its credit risk Correct Answer Incorrect Answer
B Bank would increase both its operating cost and its credit risk Correct Answer Incorrect Answer
C Bank would increase its operating cost and decrease its credit risk Correct Answer Incorrect Answer
D Bank would decrease its operating costs and increase its credit risk Correct Answer Incorrect Answer
E none of the above Correct Answer Incorrect Answer

Solution

Specialisation can reduce operating cost due to economies of scale. However credit risk may increase due to concentration risk.

Practice Next

Relevant for Exams:

×
×