Question

Usually the banker open an account in I the name of the borrower and deposit the loan amount in it. This deposit is known

• A. Primary deposit
• B. Loan deposit
• C. Bridge deposit
• D. Derivative deposit

Answer 1

Answer:

D. Derivative deposit

A derivative deposit (or secondary deposit) is money created by a bank when it grants a loan, essentially the loan amount being deposited into the borrower's new or existing account, forming the basis for further lending and money creation, distinct from a primary deposit (cash brought in by customers) and different from financial derivatives (like options/futures)