The State Bank offers an interest rate of 5.5% on savings and 6% on loans, while the Colonial Bank offers 6.5% on savings and 7% on loans. Which of the following is the LEAST likely outcome of such a situation?
A) The State Bank would experience a fall in demand for deposits.
B) The Colonial Bank would experience a surge in demand for loans.
C) The State Bank would experience a surge in demand for loans.
D) The Colonial Bank would experience a surge in demand for deposits.
Correct Answer:
Verified
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A) Arbitrage opportunities
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