Which of the following would be the best example of a ratio used to examine the cost of one of a bank's liabilities?
A)Demand deposits/Total assets
B)Interest on time deposits/Total time deposits
C)Interest on real estate loans/Total real estate loans
D)Interest sensitive assets/Interest sensitive liabilities
E)Interest on business loans/Total business loans

Question

Quizplus · Accepted Answer

The ratio of interest earned on time deposits to total time deposits would provide insight into the cost of one of the bank's liabilities - time deposits. This ratio would help the bank determine the profitability of the time deposits and help in making decisions related to pricing and managing interest rate risk.

Which of the Following Would Be the Best Example of a Ratio