The Sensitivity of Cost of Funds to Interest Rate Movements

question 12

Multiple Choice

The sensitivity of cost of funds to interest rate movements has been

• A)greater for credit unions than savings institutions.
• B)greater for credit unions than commercial banks.
• C)lower for credit unions than for savings institutions or commercial banks.
• D)similar for credit unions as savings institutions and commercial banks.

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Definitions:

Common Stock

Represents equity ownership in a corporation, providing voting rights and entitling the holder to a share of the company's success through dividends and/or capital appreciation.

Fixed Asset Turnover

A financial ratio that measures a company's effectiveness in generating sales from its fixed assets.

Net Income

The amount of a company’s profit after all expenses, taxes, and costs have been subtracted from total revenue.

Profit Margin

Profit margin is a financial metric that calculates the percentage of revenue that exceeds the costs of production, indicating how much profit a company makes for each dollar of sales.