The net interest margin of a bank is influenced by:
A)changes in the level of interest rates.
B)changes in the volume of interest-bearing assets and interest-bearing liabilities.
C)changes in interest income from loans and investments.
D)changes in interest expense on deposits and other borrowed funds.
E)All of the options are correct.

Question

Quizplus · Accepted Answer

All of the options listed can influence the net interest margin of a bank, as they all relate to changes in interest rates, interest income, and interest expenses on assets and liabilities. The net interest margin is the difference between a bank’s interest income and interest expenses, so any changes in these factors will have an impact on this measure. Therefore, all options are correct.

The Net Interest Margin of a Bank Is Influenced By