Question

The main source of profit for financial institutions comes from:

a) their ownership of stocks in commercial corporations.
b) their ownership of real assets received in foreclosures on loans to households.
c) fees charged for holding and servicing checking accounts.
d) the difference between interest paid on deposits and interest received on loans.
e) the difference between the cost of creating new money and the interest paid on loans.

Answer 1

Answer: The correct answer is choice d.

Explanation: The main source of profits for financial institutions is the interest that it receives on money that it loans out. More specifically, the difference between interest paid on deposits and interest received on loans. The other choices do represent revenue streams for financial institutions, but they are not the primary ones.