In order to arrive at an actual interest rate,a __________ is an amount added to the bank's theoretical cost of obtaining funds to lend.

Question

Quizplus · Accepted Answer

The spread is an amount added to the bank's theoretical cost of obtaining funds to lend, which then results in the actual interest rate offered to borrowers. The base rate is just the starting point for calculating the actual interest rate. The reference rate is a benchmark used for comparing interest rates, but not necessarily for determining the actual interest rate for a particular borrower. Security refers to collateral provided by the borrower and does not factor into the calculation of the interest rate.

In Order to Arrive at an Actual Interest Rate,a __________