Terp Bank obtains a relatively large portion of its funds from conventional demand deposits as it creates many branches with many employees to attract demand deposits. Its interest expenses should be relatively ____, while its noninterest expenses should be relatively ____.

Question

Quizplus · Accepted Answer

Terp Bank's interest expenses should be relatively low because demand deposits typically have lower interest costs compared to other funding sources. However, its noninterest expenses should be relatively high due to the costs associated with maintaining many branches and employing many staff members.

Terp Bank Obtains a Relatively Large Portion of Its Funds