Question

State law requires that state-chartered banks post bonds to protect against losses caused by embezzlement by bank employees. To meet this requirement, the banks post ______ bonds.

a. fidelity
b. performance
c. bank
d. fiduciary

Answer 1

State-chartered banks post fidelity bonds to protect against losses caused by embezzlement by bank employees. Fidelity bonds act as insurance against fraudulent employee acts.

Step-by-step explanation:

To meet the requirement of state law that protects against losses caused by embezzlement by bank employees, state-chartered banks post fidelity bonds. These bonds serve as a form of insurance to protect against potential losses due to fraudulent acts by employees, such as embezzlement. Unlike performance bonds, which ensure the completion of a project or service, fidelity bonds specifically protect against losses due to dishonest acts by employees.