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Understanding Credit and Financial Institutions

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Understanding Credit and Financial Institutions

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Questions and Answers

What is the primary purpose of a rural bank?

To provide large amounts of long-term fixed capital to established firms

To provide equity capital or loans to new and upcoming businesses

To accept savings deposits and pay interest on them

To help develop rural regions and finance agricultural projects (correct)

Which type of financial institution is dedicated to funding new and upcoming businesses?

Development bank (correct)

Finance company

Savings bank

Investment bank

Which type of financial institution primarily accepts savings deposits and pays interest on them?

Rural bank

Savings bank (correct)

Investment bank

Savings and loan association

What is the main purpose of an investment bank?

To provide large amounts of long-term fixed capital to established firms Signup and view all the answers

What is the main purpose of a credit union?

To lend savings of members to some of the members of the group Signup and view all the answers

Which type of finance company focuses on consumer loans?

Installment sales finance company Signup and view all the answers

What is the main purpose of credit terms?

To specify the conditions under which credit is granted Signup and view all the answers

What is the key difference between an installment loan and a revolving credit?

Installment loans have a fixed number of payments, while revolving credit does not Signup and view all the answers

What is the primary purpose of student loans?

To allow students to finance their education and defer payments until after graduation Signup and view all the answers

How do debit cards differ from credit cards?

Debit cards can be used to withdraw money from a checking account, while credit cards cannot Signup and view all the answers

What is the purpose of a credit limit?

To set a maximum amount that a customer can borrow or purchase on credit Signup and view all the answers

What is the main difference between open account credit and other forms of credit?

Open account credit is extended to the customer in advance of any transactions, unlike other forms of credit Signup and view all the answers