In a System of 100-Percent-Reserve Banking,the Purpose of a Bank

question 12

Multiple Choice

In a system of 100-percent-reserve banking,the purpose of a bank is to

• A)make loans to households.
• B)influence the money supply.
• C)give depositors a safe place to keep their money.
• D)buy and sell gold.

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Definitions:

Firm Commitment Underwriting

A type of underwriting where the underwriter buys the entire offering from the issuer and sells it to investors, assuming full financial risk.

Underwriting Spread

The difference between the amount underwriters pay to acquire securities from the issuer and the price at which they sell these securities to investors.

Shares

Portions of ownership in a corporation or financial asset available to investors.

Market Value

Market value is the current price at which an asset or service can be bought or sold in a marketplace, reflecting the value that market participants assign to it.