10 Questions
What is the most important consideration for a bank in deciding to lend to a client?
The client's credit history and reputation
What should a bank do to minimize the risk of default from borrowers?
Formulate and implement a lending policy
What is the most important use of a bank's money?
Lending to customers
How do banks typically try to ensure the safety and security of their lending?
By keeping securities and assets as collateral
What advantage can a bank gain from lending to units in another state hit by disasters?
Ability to offset losses in one state with gains in another
What is one of the most important functions of a bank?
Lending money to different kinds of borrowers
What do banks collect from people by offering interest?
Deposits
What do banks have to repay when demanded by the customers?
Amount of deposits
What power do banks have that is important in the financial system?
Power of credit creation
Why is it said that banks depend largely on lending?
To guarantee their depositors' funds
Test your knowledge of lending principles and balance sheets in banks, including the risks involved and obligations towards borrowers, depositors, and shareholders.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
