Which of the following statements regarding the amount of risk taken by a bank and the impact on the value of a bank is most likely correct?
A.
Banks need to take on a small amount risk in order to maximize shareholder value while satisfying the constraints imposed by bank regulators.
B.
Banks that are conservative in practice and take on less risk will always end up generating more value because they avoid incurring losses that would be associated with taking on more risk.
C.
Banks that are conservative in practice typically assume an optimal amount of risk of zero.
D.
Banks that are valued for their ability to provide liquid investments to their customers should take on less risk in order to maximize value.