What is the role of the FDIC?

• A. Guaranties investors’ deposits in member institutions
• B. Regulates the stock market
• C. Sets interest rates for banks
• D. Oversees municipal bonds

Answer: (A)

The main idea being tested is understanding what the FDIC does for bank customers. The FDIC's role is to provide deposit insurance for deposits held at insured banks, protecting depositors if a bank fails. This coverage, up to a specified limit per depositor per insured bank, helps maintain public confidence in the banking system and prevents losses for everyday accounts like checking, savings, money market accounts, and certificates of deposit. It does not regulate the stock market (that's the SEC), it does not set interest rates for banks (that’s the Federal Reserve), and it doesn’t oversee municipal bonds (that regulatory scope involves entities like the MSRB/SEC). So the FDIC’s function is to guarantee deposits in insured banks, which is why that option is the best fit.