The correct answer is: c. specialize in loans to just one or a few particular industries in which they have expertise in assessing creditworthiness A and specialize in loans of companies whose earnings patterns are quite similar over time B
A common method for banks to reduce their default risk is to specialize in loans to just one or a few particular industries in which they have expertise in assessing creditworthiness (option a). Additionally, they may choose to specialize in loans of companies whose earnings patterns are quite similar over time (option b). By focusing on industries they understand well and companies with stable earnings, banks aim to mitigate the risk of defaults.
the correct answer is c. A and B