Multiple Choice
Which source of funding is most commonly used to start new businesses?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is classified as a thrift institution?
A
Savings and loan association
B
Investment bank
C
Commercial bank
D
Credit rating agency
Verified step by step guidance1
Understand the term 'thrift institution': Thrift institutions are financial institutions that primarily focus on accepting savings deposits and making mortgage loans. They are designed to serve individuals rather than businesses.
Identify the types of institutions listed in the problem: Savings and loan association, Investment bank, Commercial bank, and Credit rating agency.
Analyze the characteristics of each option: Savings and loan associations are known for their focus on savings deposits and mortgage lending, which aligns with the definition of a thrift institution. Investment banks focus on underwriting securities and providing financial advisory services, which does not align with thrift institutions. Commercial banks provide a wide range of financial services, including loans and deposits, but are not specifically classified as thrift institutions. Credit rating agencies evaluate the creditworthiness of entities and are not financial institutions.
Determine which option matches the definition of a thrift institution: Based on the analysis, Savings and loan association fits the definition of a thrift institution.
Conclude that the correct classification of a thrift institution in this context is 'Savings and loan association'.
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