The main use of bank funds is ? A. repurchase agreements B. loans C. fixed assets...

The main use of bank funds is ?

A. repurchase agreements

B. loans

C. fixed assets

D. investments securities

Solutions

Expert Solution

The Correct answer is B. Loans

The primary objective of Banks is to accept deposit from public and grant loans to the public. The loans that are granted to the public are usually charged at an interest. The Interest income is one of the sources of income of the banks. If a person requires a loan he would have to ask bank to provide him with such financial assistance. The bank would open an account in the name of the borrower and credit the sum of loan to his account. The banks also provide loans to firms. These loans helps the firms to expand their operations and achieve the desired growth. Loans provided by the banks play an important role in developing the economy of a country.

Banks usually keep a certain portion of their deposits and lend the rest as loans. These deposits are kept to cater the demand to their customers when they would require to withdraw money.

Therefore it can be concluded that the main use of bank funds is loans.

jeff jeffy answered 1 year ago

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