Which statement about banks is true?

• A. A financial institution licensed as a receiver of deposits; there are two types: commercial/retail banks and investment banks; regulated by the national government or central bank
• B. A credit union
• C. An insurer
• D. A brokerage firm that trades only stocks

Answer: (A)

Banks are financial institutions licensed to receive deposits and make loans, and they operate under oversight by the government or a central bank to keep the financial system safe and protect depositors. The statement captures this idea by calling banks deposit-taking institutions that are regulated by national authorities or central banks. It also divides the banking world into two broad kinds—commercial/retail banks that serve everyday customers and businesses, and investment banks that work in capital markets—highlighting the main functions you’d expect to see in the sector. This deposit-taking role and regulatory supervision differentiate banks from other financial firms like credit unions, insurers, and brokerages, which do not operate as banks in the same sense.