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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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