Interest rate spread
Suppose that East bank currently charges a 3.5% fixed interest rate on a six -year auto loan and pays a 2.0% interest rate to customers who buy 6-month CDs. Suppose that at the end of the six-month period depositors roll over the funds in the CD for another six months. Then the interest rate spread is ?
Suppose now that market interest rates increase by 0.2%. This means that East bank has to pay the same, a lower, OR a higher interest rate on CDs when they mature, while charging a higher, a lower OR, the same interest rate on the six -year auto loans.
What will happen to the interest rate spread?
It increases to 2.0% and the East bank's interest income rises.
It remains the same and the East bank's interest income is unaffected.
It increases to 2.0% and the East bank's interest income falls.
It decreases to 1.3% and the East bank's interest income falls.
This question was answered on: Dec 08, 2020
Buy this answer for only: $15
This attachment is locked
We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free solution (Deadline assured. Flexible pricing. TurnItIn Report provided)
Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
About this QuestionSTATUS
Dec 08, 2020EXPERT
GET INSTANT HELP/h4>
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions:
- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
NEW ASSIGNMENT HELP?
Order New Solution. Quick Turnaround
Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.
WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.