A commercial bank has $10 million to lend. It is considering two strategies: Strategy A involves lending the entire amount to a single large corporation, while Strategy B involves lending $10,000 to each of 1,000 different small businesses. Assuming the expected rate of return is similar for both strategies, which of the following statements best analyzes the risk associated with these strategies?
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Lending Strategy Risk Assessment
A commercial bank has $10 million to lend. It is considering two strategies: Strategy A involves lending the entire amount to a single large corporation, while Strategy B involves lending $10,000 to each of 1,000 different small businesses. Assuming the expected rate of return is similar for both strategies, which of the following statements best analyzes the risk associated with these strategies?
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