Feinstein Analytics Is Borrowing $12,400 at 8% Interest for One

question 30

Multiple Choice

Feinstein Analytics is borrowing $12,400 at 8% interest for one year. The $12,400 is the:

• A) principal.
• B) proceeds.
• C) amount of interest.
• D) net amount.

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Definitions:

Create Money

The process by which the central bank of a country (or other monetary authority) increases the money supply, often leading to the production of physical money or the creation of digital currency units.

Reserve Ratio

The fraction of depositors' balances that banks must have on hand as cash, a regulation enforced by central banking authorities.

Reserves

Funds or materials set aside or saved for future use or to cover unforeseen expenses; in banking, it refers to the fraction of deposits that a bank keeps in hand to ensure liquidity.

Deposits

Funds placed into an account at a financial institution for safekeeping, which can include savings accounts, checking accounts, and certificates of deposit.