The Weighted Average Difference Between the Interest Received on Assets

question 20

Multiple Choice

The weighted average difference between the interest received on assets and the interest rate paid for liabilities for a bank is the banks:

• A)Interest rate spread
• B)Net interest margin
• C)Net interest income
• D)Return on equity

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Definitions:

M-Squared Measure

A measure used in finance to evaluate the performance of an investment portfolio by adjusting for its risk level compared to a benchmark.

Risk-Adjusted Return

This is a measure of how much risk is involved in generating a security's or portfolio's return, helping investors to compare the performance of different investments on a risk-adjusted basis.

Total Risk

The overall uncertainty associated with an investment, combining both systemic and idiosyncratic risks.

Long Position

An investment strategy where an investor buys securities with the expectation that their price will rise, aiming to sell them at a higher price in the future.