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On a commercial bank’s balance sheet, capital _________. A. is available to be lent to customers B. decreases if bad loans are written off C. must be held in case customers withdraw their deposits D. can
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On a commercial bank’s balance sheet, capital _________.

A. is available to be lent to customers
B. decreases if bad loans are written off
C. must be held in case customers withdraw their deposits
D. can be lent to another commercial bank in the Fed Funds market

User Sherlan
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1 Answer

7 votes

Answer:

The correct answer is letter "B": can be lent to another commercial bank in the Fed Funds market.

Step-by-step explanation:

Federal funds are composed of the money banks have in excess of their reserves that can be used as loans to other financial institutions part of the federal fund market. These loans are given son that banks can meet their daily market reserve being this the reason why the loans are based on an overnight basis.

User Malcolm Smith
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