The Earnings Spread for a Bank Is Equal To

question 85

Multiple Choice

The earnings spread for a bank is equal to:

• A)total interest income divided by total earning assets less total interest expense divided by total interest-bearing bank liabilities.
• B)total interest income less total interest expenses divided by earning assets.
• C)total operating revenues less total operating expenses divided by total assets.
• D)total cash and noncash expenses subtracted from interest and noninterest income divided by total assets.
• E)None of the options is correct.

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Definitions:

Marginal Benefit

The increased benefit or satisfaction experienced from consuming one additional unit of a product or service.

R&D Expenditures

The amount of money a company spends on research and development activities to innovate or improve its products or services.

Interest-Rate Cost-Of-Funds

The expense incurred by borrowers in order to access funds, determined by the interest rate.

R&D Expenditures

Financial investments made towards research and development activities aimed at creating new products, processes, or technologies.