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Questions and Answers
What is the primary way in which banks earn profit according to the traditional banking model?
What is the primary way in which banks earn profit according to the traditional banking model?
- Charging borrowers high interest rates
- Benefiting from the spread between deposit and lending rates (correct)
- Investing in ventures through crowdfunding
- Earning a fee from P2P lending firms
What benefit do savers receive from P2P lending as compared to traditional banking?
What benefit do savers receive from P2P lending as compared to traditional banking?
- Tax-free deposits
- Immediate withdrawals
- Higher interest rates (correct)
- Lower risk
Why might it take time for all of a large deposit to be lent out in P2P lending?
Why might it take time for all of a large deposit to be lent out in P2P lending?
- Acceptance of high-risk borrowers
- Low demand for loans
- High interest rates for borrowers
- Limited availability of suitable borrowers (correct)
What is a key drawback associated with immediate withdrawals in P2P lending?
What is a key drawback associated with immediate withdrawals in P2P lending?
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How does crowdfunding differ from traditional P2P lending?
How does crowdfunding differ from traditional P2P lending?
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