Depository institutions do all the following EXCEPT
A) minimize the cost of obtaining funds.
B) pool risks.
C) create required reserve ratios.
D) create liquidity.

Question

Quizplus · Accepted Answer

Depository institutions do not create required reserve ratios, rather these ratios are set by the Federal Reserve. Depository institutions act as intermediaries by accepting deposits from savers and lending these funds to borrowers. They pool risks by diversifying their loan portfolios, and create liquidity by offering depositors the ability to withdraw funds on demand. They also aim to minimize costs in order to maximize profitability.

Depository Institutions Do All the Following EXCEPT