Although the FDIC Was Created to Prevent Bank Failures,its Existence

question 14

Multiple Choice

Although the FDIC was created to prevent bank failures,its existence encourages banks to

• A)take too much risk.
• B)hold too much capital.
• C)open too many branches.
• D)buy too much stock.

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Definitions:

Adjusting Entry

An accounting journal entry made at the end of a period to record any unrecognized income or expenses for that period, ensuring accuracy of the financial statements.

Maturity Value

The amount to be paid to the holder of a financial instrument at its maturity date.

Note Receivable

A written promise that one party will receive a specified sum of money from another party at a future date.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage.