Interest rates are important to financial institutions since an increase in interest rate the cost of acquiring funds, and an increase in interest rate the income from assets.

Interest rates are important to financial institutions since an increase in interest rate ________ the cost of acquiring funds, and an increase in interest rate ________ the income from assets.

A) decreases; decreases

B) increases; increases

C) decreases; increases

D) increases; decreases

Solutions

Expert Solution

Higher the Interest Rate, Higher will be the Cost of acquiring Funds, and Higher the Cost of Acquiring Funds, Lower will be the Returns from Assets.

Therefore, (D) Increases; Decreases

jeff jeffy answered 2 years ago

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