ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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true
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false
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Either A or B
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None of the above
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Detailed explanation-1: -Financial Institution-A “financial institution” includes any person doing business in one or more of the following capacities: (1) bank (except bank credit card systems);
Detailed explanation-2: -Therefore, the difference between these two rate of interest act as an income for the commercial bank which is very high that makes the commercial banks, a profit making organisation.
Detailed explanation-3: -Banks are for-profit, meaning they are either privately owned or publicly traded, while credit unions are nonprofit institutions. This for-profit vs. not-for-profit divide is the reason for the difference between the products and services each type of institution offers.
Detailed explanation-4: -Like all businesses, banks profit by earning more money than what they pay in expenses. The major portion of a bank’s profit comes from the fees that it charges for its services and the interest that it earns on its assets. Its major expense is the interest paid on its liabilities.