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Which description fits a commercial bank?
AA not-for-profit cooperative owned by its own members
BA depository set up to fund household home purchases
CA firm that buys and sells securities for its clients
DA profit-oriented firm taking deposits and making loans
Answer & Solution
Correct answer: D. A profit-oriented firm taking deposits and making loans
1. A commercial bank is a profit-oriented financial institution.
2. It accepts deposits and makes business and consumer loans.
3. It also invests in government and corporate securities and provides other financial services.
4. A member-owned cooperative is a credit union and an institution built around home mortgages is a thrift, so neither description fits.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 15 "Understanding Money and Financial Institutions", section 15.3 U.S. Financial Institutions_
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