A bank is earning 6 percent on its $150 million in earning assets and is paying 4.75 percent on its liabilities. The bank's interest rate spread is ________.

Name: A bank is earning 6 percent on its $150 million in earning assets and is paying 4.75 percent on its liabilities. The bank's interest rate spread is ________.
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Question

Quizplus · Accepted Answer

The spread is calculated by subtracting the interest rate paid on liabilities from the interest rate earned on earning assets. Hence, the spread is 6% - 4.75% = 1.25%.

A Bank Is Earning 6 Percent on Its $150 Million