If interest rates on both assets and liabilities rise by 2 percent in the next 90 days,what should happen to this bank's net interest margin?
A)It should rise by 0.60 percent.
B)It should rise by 2 percent.
C)It should rise by 4 percent.
D)It should rise by 1 percent.
E)It should not show any rise.

Question

Quizplus · Accepted Answer

The net interest margin is the difference between the interest rate on assets and the interest rate on liabilities. If interest rates on both assets and liabilities rise by 2 percent, then the net interest margin will also rise by 2 percent.

If Interest Rates on Both Assets and Liabilities Rise by 2