1.4 The Sources and Applications of Funds Flashcards
1
Q
Sources that banks obtain their funds from:
A
- Customer deposits
- Short-term money markets (borrowing over short periods)
- Long-term capital markets (borrowing for long periods)
- Sale of assets
2
Q
Bonds definition
A
Long-term debt that a bank issues - the people who buy the bonds are lending money to the bank
3
Q
Equities definition
A
Shares issued by the bank
4
Q
Main ways in which banks use the money that they have obtained:
A
- Lending money
- Trading on financial markets
- Purchasing physical assets
- Paying their operational costs
5
Q
What happens in the interbank market?
A
Banks with short-term surpluses lend to banks with short-term deficits
