Question 8 2 points B Professor Gaston your History teacher

Question 8 (2 points) B Professor Gaston, your History teacher, borrows money at a rate of 6% per year from the Valley State Bank for a tuition loan for her son. You have $1,200 deposited into your checking account at the same bank earning a rate of 0.5% per year. Which of the following statements is TRUE? The bank is criminally liable to you for paying an interest rate lower than the expected rate of inflation. You and your professor have an obvious conflict of interest because you have accounts at the same financial institution. You benefit from earning interest on your deposit, safety for your funds, and having a recognizable means for paying for your financial obligations without having to hold cash. . Your professor is the only party to be made worse off by this example because she is the only party paying net interest.

Solution

Ans is C) You benefit from earning interest on your deposit, safety for your funds, and having a recognizable means for paying for your financial obligations without having to hold cash.

Explanation: Since there is always a margin difference between borrowing and lending rate, bank couldn’t be hold criminally liable for the same. Second option tell obvious conflict between you and professor, this option also not true since you are not the only party to the bank having checking account at Valley state bank, third option says you benefit from earning interest on your deposit, it is true since you are earning a rate of interest on your checking account, fourth option says professor is only party to pay net interest, its not true since there would be many borrower for bank.