Which of the Following Is NOT a Reason That People

question 464

Multiple Choice

Which of the following is NOT a reason that people tend to deposit their funds with banks rather than lend their funds directly to other individuals?

• A) adverse selection problems
• B) asymmetric information problems
• C) moral hazard problems
• D) liquidity problems

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Definitions:

Bank Indebtedness

A financial term referring to the amount of debt a company has borrowed from banking institutions.

Highly Liquid

Assets that can be easily and quickly converted into cash without significant loss in value.

Trading Investments

Securities purchased and held primarily for selling them in the near term with the goal of generating short-term profits.

Bank Overdrafts

Happens when the amount taken out of a bank account surpasses what is in the account, leading to a negative balance.