When a bank makes a car loan, the loan
A)is an asset to the bank.
B)is a liability to the bank.
C)is an asset to the person taking it out.
D)is a money market instrument.

Question

Quizplus · Accepted Answer

When a bank makes a car loan, it is considered an asset to the bank because the bank expects to receive repayment with interest over time. The loan creates an income stream for the bank and increases its overall wealth.

When a Bank Makes a Car Loan, the Loan