Question

Sandy and John make an appointment with their banker to apply for a home loan at XYZ bank. Daniel goes to the same bank to organize a term deposit. Ruth is planning to set up a savings account with the same bank. Who are XYZ bank's creditors?

Option 1: Sandy and John
Option 2: Daniel
Option 3: Ruth
Option 4: None of them

Answer 1

Daniel, who is organizing a term deposit, and Ruth, who is planning to set up a savings account, are the creditors of XYZ bank. Sandy and John are not creditors; instead, they would be debtors, as they are applying for a loan.

Step-by-step explanation:

The question asks who among Sandy and John, Daniel, and Ruth are XYZ bank's creditors. A creditor is an entity to which money is owed. In general banking terms, depositors are considered creditors to the bank because the bank owes them the money they deposited. So, Daniel, who organizes a term deposit with XYZ bank, is a creditor because the bank is in possession of his money for a specified term and must pay it back along with interest. Similarly, Ruth, who is planning to set up a savings account, becomes a creditor once she deposits her money because the bank owes her the balance in her savings account.

On the other hand, Sandy and John are applying for a home loan, which means they are seeking to borrow, not deposit; thus, they would be debtors, not creditors, to the bank once the loan is approved and disbursed.