Chapter P1, Problem 5RQ

To determine

The five questions that someone should ask before deciding to put money in financial institution

Explanation of Solution

The following are the five questions that someone should ask before deciding to invest money in financial institution:

1. What fees financial institutions will charge: As bank charges various fees for its services including minimum balance, account maintenance, return deposits, or transferring charges, therefore it is important to know the bank or other financial institutions’ fees to utilize funds before deciding to invest money.
2. What is institutions’ interest rate: This question is important to ask while investing money in the institution because to earn from investment, it is essential to put money where interest rate is high.
3. If institution provides good customer service: The answer of this question provides the information about institution’s dealing and services for their customers which is important to ask before investing money. A person can check reviews of the institution to get answer of this question.
4. Whether institution provide online services: This is also essential to ask because online services of the institution help to transfer quickly and safely.
5. Whether money will be insured in the institution: If the money is insured in the institution, then there is surety for the investment that the institution will return certain amount of invested money.

Economics Concept Introduction

Introduction: Financial institution Such as bank are the institutions that accept deposits of customers and lend the money to borrowers by charging service fees. They offer loans to an individual or business and also provide sales and trading services to business firms.