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Is it a good idea to put savings in banks even after the deduction of interest rates?
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- If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds, what policy must the bank follow?What risks might commercial banks face if they use short-term deposits from savers to pay for long-term loans, like mortgages, that often have fixed interest rates? What could the financial institution do to lower these risks?why do banks consider interest on loans to be important?
- What is the term of interest on bank overdraft?Which of the following decreases the likelihood of bank failures by keeping banks from making risky loans? FDIC insurance The discount window Reserve requirements Capital requirementsWhy do federally guaranteed loans usually have the least risk for banks, List some popular guaranteed loan programs.
- What risks might commercial bank operations face by funding long-term loans such as mortgages to borrowers (often at fixed interest rates) with short-term deposits from savers? What steps could the financial institution take to reduce these risks?Why are the banks reluctant to lend, and what should be done to increase bank lending?What are the advantages and disadvantages of direct lending for the bank?
- Describe a short-term financing option and discuss the advantages and disadvantages. Is there a limit to the amount of a short-term bank loan?How does commercial paper differ from a bank loan? Why is the interest rate often less for commercial paper?What are the advantages and disadvantages of direct lending for the bank? How are banks reducing the effect of the disadvantages?