Question

US Commercial banks have traditionally earned most of thier money from:

		Collecting items from defaulting borrowers and selling those items at a higher price.
		By earning interest on investments in corporate bonds.
		Borrowing at a low interes rate and lending at a higher rate.
		By selling foreclosed homes.
		By trading stock in the stock market.

Over the past ten years, the legal and accounting costs of US banks have grown primarily because of which law?

		The Federal Reserve Act
		The Dodd-Frank law
		The Community Reinvestment Act
		NAFTA

Answer 1

US Commercial banks have traditionally earned most of their money from:

Option c) Borrowing at a low-interest rate and lending at a higher rate.

The primary business of commercial banks is to pay a low-interest rate on the deposits and lend money to others at a higher interest rate.

All the other answer options are part of the business of commercial banks, but they are not the core business operations. And, the banks do not try to make more money with those activities.

Over the past ten years, the legal and accounting costs of US banks have grown primarily because of which law?

Option b) The Dodd-Frank Law

The Dodd-Frank Law was introduced after the financial crisis in 2008 aimed at regulating the banking sector. In an effort to prevent such a crisis happening again, the law required significant monitoring of the financial system. This increased legal and accounting costs.

Can you please upvote? Thank You :-)