An FI's Financing Gap Is the Difference Between an FI's

question 49

Multiple Choice

An FI's financing gap is the difference between an FI's:

• A)average core deposits and average loans
• B)average loans and average core deposits
• C)assets and liabilities
• D)liabilities and assets

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Definitions:

Annual Rate

The interest rate for a whole year, as opposed to a rate for a shorter period.

Terms of Payment

The conditions under which a seller will complete a sale, often specifying the period allowed to a buyer to pay off the amount due.

Compensating Balance

A minimum bank balance that a borrower must maintain as a condition for obtaining a loan, often used to compensate banks for the loan services.

Effective Interest Rate

The real interest rate on a loan or financial product, accounting for the effect of compounding over a given period.