A change in net interest income would occur when:
A) the composition of the assets of the bank change.
B) the average asset yield changes.
C) the volume of the assets of the bank change.
D) the average interest expense changes.
E) All of the above

Question

Quizplus · Accepted Answer

Net interest income is a function of both the interest income earned from assets and the interest expense paid on liabilities. Therefore, any changes in the composition, volume, and average yield of assets and liabilities as well as the average interest expense will affect the net interest income of the bank.

A Change in Net Interest Income Would Occur When