In banking, the gross spread is:
A) the difference between the rate a bank borrows at and the difference a bank lends at.
B) the difference between the federal funds rate and the discount rate.
C) the difference between a bank's checking deposits and its reserves.
D) the difference between the rate a bank lends at and the rate of inflation.

Question

Quizplus · Accepted Answer

The gross spread in banking refers to the difference between the interest rate at which a bank borrows funds (often from deposits or interbank markets) and the rate at which it lends those funds to borrowers. This spread is a critical component of a bank's profitability. Choices B, C, and D describe other financial concepts that are not related to the definition of gross spread.

In Banking, the Gross Spread Is