Compared to commercial banks and thrift institutions, finance companies are Question 4 options: A) prevented from making relatively small loans. B) virtually unregulated. C) able to attract small depositors. D) heavily regulated.

Question

Ashley Hurley

Business

27 August, 01:16

Compared to commercial banks and thrift institutions, finance companies are Question 4 options: A) prevented from making relatively small loans. B) virtually unregulated. C) able to attract small depositors. D) heavily regulated.

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Answers (1)

Know the Answer?

Kierra Ellison · Answer 1

The correct answer is letter "B": virtually unregulated.

Explanation:

A commercial bank accepts deposits, offers checking account, makes business, personal, and mortgage loans, and offers basic financial products like Certificate of Deposits (CD) and savings accounts to private individuals and small businesses.

Thrift institutions are relatively smaller than commercial banks and mainly accepts deposits and offers home mortgages. Finance companies offer loans as well but at a higher interest rate than commercial banks.

The difference between them is that commercial banks and thrift institutions are regulated by the Federal Reserve System while finance companies are regulated by the State where they operate which makes them be virtually unregulated by a financial entity.