How do banks make money?

By circulating money

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By lending money at higher interest rates

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By investing in the share market

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By borrowing money

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Solution

The correct option is B
By lending money at higher interest rates

Banks basically make money by lending money at rates higher than the cost of the money they lend.

More specifically, banks collect interest on loans and interest payments from the debt securities they own,

and pay interest on deposits, CDs, and short-term borrowings.

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Similar questions

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