The Formula for a Bank's Interest Rate Spread Is

question 23

Multiple Choice

The formula for a bank's interest rate spread is

• A)IR_spread = IR_deposits − IR_loans.
• B)IR_spread = IR_deposits − IR_loans −  Rate of inflation.
• C)IR_spread = IR_loans − IR_deposits −  Rate of inflation.
• D)IR_spread = IR_loans − IR_deposits.

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Definitions:

Cost Complementarity

Occurs when the cost of producing one good decreases with the increase in production of another good, showing a synergy between the production processes of two goods.

Diseconomies Of Scope

The phenomenon where the cost of producing two or more products together is higher than producing them separately.

Economies Of Scope

cost advantages that enterprises obtain due to the efficient allocation and utilization of resources across multiple products or services.

Diseconomies Of Scope

A situation in which a company experiences increased costs as a result of increasing the variety of goods or services it produces.