You Place $500 into Your Checking Account at First Bank

question 75

Multiple Choice

You place $500 into your checking account at First Bank and earn 1% APR on your deposit.Your professor borrows money at a rate of 8% from the same bank for a tuition loan for her son.Which of the following statements is true?

• A)The bank is criminally liable to you for paying an interest rate lower than the expected rate of inflation.
• B)You and your professor have an obvious conflict of interest because you have accounts at the same financial institution.
• C)You benefit from earning interest on your deposit,safety for your funds,and having a recognizable means for paying for your financial obligations without having to hold cash.
• D)Your professor is the only party to be made worse off by this example because she is the only party paying net interest.

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