The principal and interest What is the true definition of Compound interest? Main part amount you are borrowing

not-for-profit bank owned by its depositor members, who are drawn from a group of people with something in common

Only members can borrow from the credit union.

Credit unions make several types of loans, including home mortgages, auto loans, and small personal loans

Members might be employees of a company, members of a labor union, or veterans of a military service.

Restricted membership reduces the problem of asymmetric information in lending.*

Find the features that are true for Finance company:

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  Finance company
  

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  nonbank financial institution that makes loans but does not accept deposits
  
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  Finance companies raise funds exclusively by issuing bonds and borrowing from banks.
  
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  Many finance companies specialize in a certain kind of loan. For example, some lend to businesses for new equipment.
  
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  Others are owned by manufacturing companies and lend to their customers.
  

What is a merger in banking?

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  In a merger, two banks agree to combine their businesses, or one bank buys the other.
  

Find the incorrect motives for mergers:

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  Economies of Scale Banks reduce transaction costs through economies of scale. When banks become larger, scale economies increase: banks can reduce the costs of making a loan or managing a customer’s account. If two banks merge, for example, they can reduce costs by combining their computer systems.
  
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  Diversification The benefits of diversifying—not putting all your eggs in one basket—apply to banks as well as to individuals. Banks can diversify by expanding geographically. If a bank operates in a small area, a slowdown in the local economy can cause many loan defaults. Mergers widen the bank’s operating area, reducing its sensitivity to local problems.
  
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  ■ Empire Building Bank managers may also have personal motives for expansion. In banking, as in most industries, executives receive higher salaries at larger institutions. Managers may also enjoy the power and prestige of running a large bank. Consequently, they may push for mergers even if the deals don’t increase profits.
  

Select a suitable example of Economies of scale motive for mergers:

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  Economies of Scale Banks reduce transaction costs through economies of scale. When banks become larger, scale economies increase: banks can reduce the costs of making a loan or managing a customer’s account. If two banks merge, for example, they can reduce costs by combining their computer systems.
  

What does Too big to fail (TBTF) doctrine state?

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