Bank T generally obtains a high percentage of its funds from negotiable certificates of deposit (NCDs). Bank V obtains most of its funds from retail CDs. Bank Z obtains its funds from checkingaccounts. The bank that will likely incur the highest interest expense is ____.
A) Bank T
B) Bank V
C) Bank Z
D) all banks are the same

Question

Quizplus · Accepted Answer

Bank T obtains most of its funds from negotiable certificates of deposit, which typically have higher interest rates than retail CDs and checking accounts. Therefore, Bank T is more likely to incur the highest interest expense among the three banks.

Bank T Generally Obtains a High Percentage of Its Funds