Consider a banker who makes a loan of $100 for one year and is to receive $108 at the end of the year. Which of the following is true? (Points: 2)
a) Since bankers only make a profit from interest income, his main focus is to receive a "return on his investment".
b) the $8 paid at the maturity is considered your "return of your original investment".
c)the banker's main focus is to receive a return OF his investment; even though he may have earned nothing, he will be able to "live another day".
d) he doesn't care as he is taking the same risk as you.
2007-04-05 02:24:52 · 5 answers · asked by kvs 6 in Business & Finance ➔ Investing
A is the most correct but not completely. Bankers do make most of their profit on interest income, they also make profits on income from fees, investment banking services, trust management services, etc. But for this example where he only makes loans, A is correct.
b) wrong. the $8 is interest income, the "return of ...original investment" is the $100.
c) wrong. The main focus is to receive a return ON his investment, or profit.
d) wrong. Without profit, he might live another day, but would have no money (profit) to pay himself a salary.
2007-04-05 02:46:16 · answer #1 · answered by gosh137 6 · 2⤊ 0⤋
Your possible answers do not make sense, either grammatically or technically.
The reward for a correct answer is 10 points. How are you going to withhold 5 points? Why would you want to withhold points? You don't get anything for trying to keep points.
2007-04-05 02:30:13 · answer #2 · answered by regerugged 7 · 5⤊ 0⤋
A.. And I would love to get to know you better, you seem like a nice boy.
2007-04-05 05:44:01 · answer #3 · answered by Calli T 2 · 0⤊ 1⤋
Ther is no such banker
2007-04-05 02:31:38 · answer #4 · answered by Richard L 1 · 0⤊ 2⤋
The correct answer would be choice "E".
2007-04-05 02:37:41 · answer #5 · answered by littleceasersdad1 2 · 0⤊ 3⤋