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One way for a bank to deal with credit risk is to

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One way for a bank to deal with credit risk is to

add a markup to the cost of funds for a specific borrower based on the borrower's credit history.

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increase the number of loans made in any year.

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charge all borrowers from the same industry an average rate for that industry.

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avoid making loans to borrowers from a broad spectrum and specialize geographically and in specific industries.

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