In Effect, Banks Are Able to Charge

question 38

Multiple Choice

In effect, banks are able to charge

• A)depositors for banks' superior information about borrowers.
• B)borrowers for banks' superior information about depositors.
• C)the government for banks' superior information about borrowers and depositors.
• D)interest rates that are in fact above those legally allowed.

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Definitions:

Petty Cash Fund

A small amount of cash on hand used for covering minor or incidental expenses within a business.

Petty Cash Receipt

A document used to record small, miscellaneous expenses paid with petty cash funds.

Cash Equivalents

Short-term, highly liquid investments that are easily convertible into a known amount of cash and close to their maturity.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.