THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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had to pay all the businesses insured against bankruptcy
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ran out of cash to pay all the investors who needed ready money after the crash
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had lent huge sums to foreign banks that could not repay the loans after the crash
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were already in a crisis, and the stock market crash made them run out of money
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Detailed explanation-1: -Many of the small banks had lent large portions of their assets for stock market speculation and were virtually put out of business overnight when the market crashed. In all, 9, 000 banks failed–taking with them $7 billion in depositors’ assets.
Detailed explanation-2: -Concerning causes of the banking crises, some scholars conclude that banks failed because the economy contracted. Loan default rates rose. Asset values declined. Deteriorating fundamentals forced banks into insolvency, continuing a process of liquidation that began during the 1920s.
Detailed explanation-3: -If you are a short-term investor, bank CDs and Treasury securities are a good bet. If you are investing for a longer time period, fixed or indexed annuities or even indexed universal life insurance products can provide better returns than Treasury bonds.