Which of the following statements is correct? Select one: a. A line of credit is an...

Which of the following statements is correct?

Select one:

a. A line of credit is an agreement between a bank and a customer under which the bank guarantees the customer a fixed dollar amount of loan.

b. Banks issue commercial paper for raising funds for long periods

c. Securitisation of loans reduces banks’ capital requirements.

d. The principal source of funds for banks is through the issue of debt securities.

Solutions

Expert Solution

Securitization of various types of loans of the bank will be reducing the capital requirement of the banks because it will be helping the banks to use of the funds more efficiently and it will help in also generation in new type of capital so it will decrease the overall capital requirement.

All the other statement are false.

Correct answer will be option (C ) securitization of loans reduces banks capital requirements

jeff jeffy answered 1 year ago

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