ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The banks will lend the money out to borrowers, charging the borrowers a higher interest rate and profiting off the interest rate spread. Additionally, banks usually diversify their business mixes and generate money through alternative financial services, including investment banking and wealth management.

Detailed explanation-2: -An investor purchases an asset in the hopes that its value will grow and they can then sell it for more than they bought it for, earning a profit. Income is the regular payment of funds from the purchase of an asset.

Detailed explanation-3: -An investor is someone who provides (or invests) money or resources for an enterprise, such as a corporation, with the expectation of financial or other gain.

Detailed explanation-4: -Borrowing to invest, also known as gearing or leverage, is a risky business. While you get bigger returns when markets go up, it leads to larger losses when markets fall. You still have to repay the investment loan and interest, even if your investment falls in value.

Detailed explanation-5: -Private funding sources are, essentially, non-bank lending sources. That can be family members, angel investors, venture capitalists or private lending institutions. It’s a source of cash that a business owner can access to bankroll operations, grow their business and meet cash flow needs.