Sally deposits her money in a financial institution that guarantees her an interest rate. The institution...
Sally deposits her money in a financial institution that guarantees her an interest rate. The institution then loans her money to Mark who does not have an account with the institution. What type of institution did Morris deposit his money in?
Select one:
a. A Mutual Fund Family (Investment Management Company)
b. Federal Reserve System
c. A Commercial Bank
d. A Credit Union
e. An Investment Bank
Homework Answers
Answer: c
This is a commercial bank, which accepts deposit and provides loans. These are the two main acts of a commercial bank. The person depositing there must have an account there, such as savings account, checking account, and fixed deposit account.
Banks provide loans to them who may or may not have accounts in that bank.
In this way commercial banks are intermediary between savers and borrowers.
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