Question

Describe 5 Core Principles of Money Banking.

Answer 1

The 5 core principle of money banking is described below

1. Time - the time value of money is very important and we have to calculate it. The value of money is changing from time to time. Ao gor a banker it has to be calculated and according to that only he can make adjustments.

2. Risk - For the risk we take we get more interest . This is the risk reward system. The less risk we are taking the lesset amount of return we get.

3. Information- Information is the basis for decisions. Problems can arise when there is in adequate information. So we have to ensure that the information is correct.

4. Market allocate resources- when our needs get unlimited there may bot be that much of resources . So we have to ensure that there is enough resources and we will make optimum utlisation of scarce resources.

5. Stability - unstable market creates lots of problem and stable market helps to make the economy more enhanced. When the financial system is stable then it will leads to smooth function of the whole economy.

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