Which One of the Following Is a Source of Profit

question 37

Multiple Choice

Which one of the following is a source of profit for a swap dealer?

• A) Commission charged on the sale of bonds
• B) Bid-ask spread
• C) Margin account
• D)Option premium

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Definitions:

Fractional Reserve Economy

An economic system where banks hold a portion of customers' deposits in reserve and lend out the remainder, thus creating money.

Required Reserve Ratio

The minimum fraction of deposits banks are required by law to keep as reserves, either in their vaults or on deposit at a central bank.

Term Auction Facility

A monetary policy tool used by the Federal Reserve to provide short-term loans to banks, aiming to improve liquidity and stability in financial markets.

Bank Insolvency

A situation where a bank's liabilities exceed its assets, making it unable to meet its obligations and continue its operations.