Q: Commercial banks are funded through which of the following?
- 1Stock holdersfalse
- 2Government fundingfalse
- 3Servicesfalse
- 4Customer depositstrue
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Answer : 4. "Customer deposits"
Explanation :
Answer: D) Customer deposits Explanation: A commercial bank is a type of financial institution that accepts deposits, offers checking account services, makes business, personal and mortgage loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking, as opposed to an investment bank. Commercial banks are funded through customer deposits. These banks make money by providing loans and earning interest income from those loans. The types of loans a commercial bank can issue vary and may include mortgages, auto loans, business loans and personal loans. A commercial bank may specialize in just one or a few types of loans. Customers who deposit money into these accounts effectively lend money to the bank and are paid interest. However, the interest rate paid by the bank on money they borrow is less than the rate charged on money they lend.