Question

Tony is facing a financial crisis in his business. Instead of applying for a loan from a commercial bank, he takes a loan from the cooperative that he partly owns with some of his friends. This cooperative acts as a depository institution where all the members deposit their savings on a higher interest rate than that offered by commercial banks. Being a member of this cooperative, he gets the advantage of being charged lower interest rate on his loan. Based on the information given in the scenario, the cooperative owned by Tony and his friends exemplifies a(n) _____.
a.investment bank.
b. savings and loan association.
c. private equity firm.
d. credit union.

Answer 1

Answer:

d. credit union.

Explanation:

According to the specification provided within the question it seems that Tony and his friends are part of a credit union. This term refers to a financial cooperative that is owned and controlled by the members within it, in which the members are given credit at very competitive rates compared to banks or other financial institutions offering loans. Which is exactly what Tony and his friends seem to be part of since they are part of a cooperative that charges them lower interest rates on their loans, therefore defining a credit union.

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