Explanation

Option C is correct because commercial banks' assets are adjusted with regulatory risk-weights when reporting total assets on the balance sheet for financial reporting purposes. This reflects the risk-based capital requirements under regulatory frameworks like Basel III.

• Option A is incorrect: Insured deposits are liabilities, not assets, on a bank's balance sheet.
• Option B is incorrect: While some financial instruments may be measured at fair value, most bank assets (like loans) are typically carried at amortized cost, not fair market value, for financial reporting.
• Option C is correct: Regulatory risk-weights are applied to different asset classes to determine risk-weighted assets, which is a key component of capital adequacy calculations.