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

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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

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