Question

A bank will increase its profit margin when rate raise if it is able to maintain...

A bank will increase its profit margin when rate raise if it is able to maintain market share and:

A- Lower its mortgage rate faster than general rate rise

B- Raise its mortgage rate faster than general rate rise

C- Keep its saving account interest rate lower ever as rate rise

D- Raise the rate at which its borrows from other bank

E- Both B &C

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The bank can increase the profit margin when the rate will rise in the market and it is able to maintain the same savings account interest rate even if the rate is rising and it is able to increase the mortgage rate faster than the general rate wso these both factors will be contributing into higher profit margin for the bank because it would be leading into to higher profits.

Other options are not correct because they are representing decrease in profits.

Correct answer is option (E) both B&C

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
I anticipate that I will be able to increase my gross profit margin, operating profit margin...
I anticipate that I will be able to increase my gross profit margin, operating profit margin and net profit margin in the upcoming year. assuming that my sales also increase modestly, that my level of debt does not change and that I do not enter into any new operating or capital leases, what will likely happen to both my TIE and FCC ratios? a) fcc will stay the same but TIE will increase b) both the TIE and the FCC...
Bank A and Bank B have the same net income, equity multiplier (EM) and profit margin...
Bank A and Bank B have the same net income, equity multiplier (EM) and profit margin (PM). However, Bank A has a higher ROA than Bank B. Which of the following statements is most correct? Group of answer choicesBank A has lower financial risk than Bank B Both banks have the same asset utilisation, but Bank A has a lower ROE than Bank B. Bank A has lower leverage than Bank B Both banks have the same asset utilisation, but...
a. Regional Maritime University wants to increase her profit margin by 20% by increasing the school...
a. Regional Maritime University wants to increase her profit margin by 20% by increasing the school fees by 10%. With your knowledge in elasticity, will Regional Maritime University be able to achieve this target? Explain your answer b. Nestle Ghana Limited wants to know if they raise the price of Milo by ¢0.10/tin, will their profit margin go down, go up or remain unchanged? Explain your answer c. The government of Ghana wants to cut down rice importation by 50%....
1. When the inflation rate is 4 percent, the Bank of Canada will A) buy bonds...
1. When the inflation rate is 4 percent, the Bank of Canada will A) buy bonds to lower interest rates and shift the aggregate demand curve rightward. B) sell bonds to raise interest rates and shift the aggregate demand curve leftward. C) do nothing, since an interest rate of 4 percent is desirable. D) sell bonds to lower interest rates and accelerate the economy. E) buy bonds to raise interest rates and slow down the economy. 2. If the annual...
For a typical bank with more rate-sensitive liabilities than assets, the use of floating-rate loans is...
For a typical bank with more rate-sensitive liabilities than assets, the use of floating-rate loans is beneficial for all but which of the follow reasons? A interest rate risk is transformed into credit risk B less need for other measures such as interest rate swaps, simplifying operations C overall bank interest rate risk is lowered, resulting in better inrerest rate stress test results D net interest margin does not fall as much when rates rise, helping maintain Net Income
Cornwall Corporation is planning to raise $1,000,000 to finance a new plant. Which of the following...
Cornwall Corporation is planning to raise $1,000,000 to finance a new plant. Which of the following statements is CORRECT? a. If debt is used to raise the million dollars, the cost of the debt would be lower if the debt were in the form of a fixed-rate bond rather than a floating-rate bond. b. The company would be especially eager to have a call provision included in the indenture if its management thinks that interest rates are almost certain to...
3. Depending on the type of banking system a nation has, when its commercial bank reserves...
3. Depending on the type of banking system a nation has, when its commercial bank reserves increase by $1, that nation’s money supply could increase by more than $1. The rate at which money is created when commercial bank reserves rise is known as the money multiplier. A. Why is the money multiplier is generally greater than 1? In what special case would the money multiplier be equal to 1? B. Suppose the initial money supply is $1,000 and the...
Business A has a profit margin lower than Business B. Business A and Business B share...
Business A has a profit margin lower than Business B. Business A and Business B share the same amount of TOTAL LIABILITIES Business A and Business B share the same amount of TOTAL EQUITY Is it possible for Business A's ROE to be the same as Business B's ROE? NO, it is not possible Yes, if Business A TOTAL ASSET TURNOVER is higher than Business B. Yes, if Business A TOTAL ASSET TURNOVER is the same as Business B Yes,...
1) John Gustav Knut Wicksell (1851-1926)          a.      was from Sweden.          b.      suggested that saving...
1) John Gustav Knut Wicksell (1851-1926)          a.      was from Sweden.          b.      suggested that saving will increase, borrowing/investment will decrease, and prices will fall if the “bank rate of interest” is above the so-called natural rate.          c.       suggested that saving will decrease, borrowing/investment will increase, and prices will rise if the “bank rate of interest” is below the so-called natural rate.          d.      all of the above. 2) Wicksell theorized that if (because of an economic slowing) prices...
Assume bank a has a 5 percent tier 1 leverage ratio and a large percentage of...
Assume bank a has a 5 percent tier 1 leverage ratio and a large percentage of assets are invested in treasury securities. Bank B has an 8 percent Tier 1 leverage ratio and a large percentage of assets are invested in consumer debt. How would Bank A compare to Bank B base on the capital and asset quality criteria of the CAMELS system? a- Bank A is safer based on both criteria b- Bank B is safer based on both...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT