That is, the risk of a portfolio of loans is less than the sum of individual risks
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That is, the risk of a portfolio of loans is less than the sum of individual risks of each loan because individual loans’ risks are not perfectly correlated with each other. The lower the degree of correlation among loans’ risks, the lower the risk of a loan portfolio.
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Related Book For 
Financial Markets And Institutions
ISBN: 9781259919718
7th Edition
Authors: Anthony Saunders, Marcia Cornett
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