Chapter 14- banks Flashcards
1
Q
Working capital
A
Refers to finance needed to keep the company’s day to day business going
2
Q
Collateral
A
On a loan means that there is no risk to the lender. If they cannot be paid, the collateral assets can be sold to pay off the debt
3
Q
The banking system is founded on two key factors…
A
1) banks must act wisely so that they are able to cover the risks they take on when they lend to investors
2) must be trustworthy so that depositors(savers) are confident their money is safe
