In General, When Interest Rates Fall, a Savings Institution's Cost

question 21

True/False

In general, when interest rates fall, a savings institution's cost of obtaining funds declines more than the decline in the interest earned on its loans and investments.

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Definitions:

Earned Income

Income generated from the sale of goods or services by an organization, as distinct from donations or grants.

Liability

A legal responsibility or obligation, often in financial terms, that a person or entity has to another.

Business Risk

The exposure to factors that may cause a business to experience lower profits or financial loss, including market competition, regulatory changes, and operational failures.

Endowment Management

The process of overseeing and making investment decisions for an endowment fund to ensure its ability to support a particular organization or cause over time.