You earn _____ when a bank loans out a portion of your money to others.A.dividendsB.principalC.interestD.royaltiesSUBMITarrow_backPREVIOUS

Breaking Down the Problem

1. Identify the context: The question pertains to banking and the concept of earning from loans.
2. Evaluate the choices provided: A) dividends, B) principal, C) interest, D) royalties.

Relevant Concepts

1. Dividends - payments made to shareholders from profits.
2. Principal - the initial amount of money invested or loaned.
3. Interest - the cost of borrowing money, typically expressed as a percentage of the principal.
4. Royalties - payments made for the use of a property, typically intellectual property.

Analysis and Detail

• When a bank loans out a portion of your deposited money, it charges the borrowers interest on the amount loaned.
• The bank earns interest from the borrower, which is then often shared with depositors. This means depositors are effectively earning interest on their money that is loaned out.

Verify and Summarize

• We can eliminate dividends and royalties as they are not relevant to money loaned by banks.
• Principal is not an earning; it is the amount deposited.
• The correct answer is interest.

Final Answer

C. interest