Would the Maximum Loan That a Bank Can Make Be

question 188

Essay

Would the maximum loan that a bank can make be different when receiving a discount loan from the Federal Reserve of $1 million versus receiving a checking account deposit of $1 million? Explain why or why not.

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Definitions:

Actual Authority

The express and implied powers given to an agent by a principal, allowing them to make legally binding decisions on the principal’s behalf.

Apparent Authority

Apparent authority refers to a situation where someone reasonably believes another has the authority to act on behalf of an organization due to the organization's actions or communications.

Principal

The primary individual or entity involved in a transaction or contract, or a sum of money lent or invested on which interest is paid.

Actual Authority

The express and implied powers granted by a principal to an agent to enter into contracts or make decisions on behalf of the principal.