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    Question

    The interest yield for a bank

    is
    A Interest earned/average advances Correct Answer Incorrect Answer
    B Interest income/average investments Correct Answer Incorrect Answer
    C Interest paid/average deposits Correct Answer Incorrect Answer
    D Net interest income/average advances Correct Answer Incorrect Answer
    E Net interest income/average assets Correct Answer Incorrect Answer

    Solution

    Some important terms for a bank are: 1)    Interest yield = interest earned/average advances 2)    Cost of deposits = interest paid on deposits/average deposits 3)    Net interest income (NII) = interest earned – interest paid 4)    Net Interest Margin = NII/average total assets

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