Finance Concepts (Banks2)

A bank is a business.

• True

• False

When people have a savings account, they

• earn interest on the money in the savings account.

• pay interest to the bank because the bank is storing their money for them in a safe place

Banks put money to work once it is deposited in accounts. What happens to the money?

• All of it is placed in a vault. (In Reserve)

• All of it is loaned to people.

• Some of it is held in reserve; Much of it is loaned to people.

Banks loan money to people. Identify examples of loans which are available for consumers at banks.

• Home Loans (Mortgages)

• Car Loans

• Expand a Business

• Student Loans for College

If savers didn't put their money in banks, what would happen? Choose the realistic answer...

• A panic would occur & people would start hiding their life savings somewhere in their home.

• Banks would have little or no money to lend.

• Banks would open more bank branches in the same area.

When a person borrows money from a bank, the bank will charge the person interest on the amount borrowed.

• True

• False

Which type of bank is NOT classified as a thrift institution?

• Credit Union

• Savings & Loan Associations

• Savings Banks

• Commercial Banks

Members of this type of bank share a common bond such as working in the same factory.

• Commercial Banks

• Credit Unions

FDIC stands for this.

• Federal Deposit Insurance Company

• Federal Deposit Insurance Corporation

FDIC insures money up to this dollar amount.

• $1000

• $2000

• $100,000

• $250,000