Question

What types of investments do banks use to make a profit? Check all that apply.

opening checking accounts
starting new businesses
buying stocks and bonds
buying several properties
issuing loans to all customers
buying the rights to loans

Answer 1

Select:
- buying stocks and bonds — yes (banks invest in securities for income and liquidity)
- issuing loans to customers — yes (making loans is a primary way banks earn interest profit)
- buying the rights to loans — yes (buying loan portfolios/participations or mortgage-backed securities earns interest/fees)

Do not select:
- opening checking accounts — that's a funding source (deposits), not an investment
- starting new businesses — not a typical bank investment (though banks may sometimes invest in firms, they generally don't "start" businesses)
- buying several properties — banks may hold real estate (e.g., foreclosures) or own branches, but buying property as a profit-making activity is not a primary banking investment.