ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the interest they receive from loans
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fees charged to customers for accounts
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money deposited in savings accounts
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special accounts such as NOW accounts
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Detailed explanation-1: -The primary source of income for banks is the difference between the interest charged from the borrowers and the interest paid to the depositors. Banks usually collect higher interest from loans than the interest they provide for deposits.
Detailed explanation-2: -Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors is their main source of income.
Detailed explanation-3: -More specifically, banks collect interest on loans and interest payments from the debt securities they own, and pay interest on deposits, CDs, and short-term borrowings. Q. Assertion (A): Banks earn their profits by mobilising the depositor’s money to the borrowers and keeping a portion of the interest charged.