The Interest Rate Margin Shows How Much a Bank Makes

question 66

True/False

The interest rate margin shows how much a bank makes out of its intermediation activities and therefore the resources it is using up in performing them.

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Definitions:

Preemptive Right

A shareholder's right to maintain their proportionate ownership by buying additional shares before they are offered to the public.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which does not necessarily match the market value.

Legal Capital

The minimum amount of capital that a company is required to maintain by law, often to protect creditors from the company's potential losses.

Treasury Stock

Treasury stock refers to shares that were once part of the outstanding shares of a company but were repurchased by the company itself.