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Questions and Answers
What is the most important consideration for a bank in deciding to lend to a client?
What is the most important consideration for a bank in deciding to lend to a client?
- The client's credit history and reputation (correct)
- The client's wealth and assets
- The client's industry and business sector
- The client's personal connections and networks
What should a bank do to minimize the risk of default from borrowers?
What should a bank do to minimize the risk of default from borrowers?
- Formulate and implement a lending policy (correct)
- Lend only to large, established companies
- Require extensive collateral
- Charge high interest rates
What is the most important use of a bank's money?
What is the most important use of a bank's money?
- Lending to customers (correct)
- Holding cash reserves
- Funding the bank's own operations
- Investing in stocks and bonds
How do banks typically try to ensure the safety and security of their lending?
How do banks typically try to ensure the safety and security of their lending?
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What advantage can a bank gain from lending to units in another state hit by disasters?
What advantage can a bank gain from lending to units in another state hit by disasters?
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What is one of the most important functions of a bank?
What is one of the most important functions of a bank?
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What do banks collect from people by offering interest?
What do banks collect from people by offering interest?
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What do banks have to repay when demanded by the customers?
What do banks have to repay when demanded by the customers?
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What power do banks have that is important in the financial system?
What power do banks have that is important in the financial system?
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Why is it said that banks depend largely on lending?
Why is it said that banks depend largely on lending?
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