8-40 An FI's net interest income reflects
A)its asset?liability structure.
B)market rates of interest.
C)the riskiness of its loans and investments.
D)the cost of its deposit and non?deposit sources of funds.
E)All of the above.

Question

Quizplus · Accepted Answer

Net interest income of an FI is affected by all the factors mentioned in the options A-D. The asset-liability structure determines the rate at which the FI borrows and lends, market rates of interest affect the yield on the FI's interest-earning assets and the cost of its funding sources, and the riskiness of its loans and investments affect the returns earned by the FI. Therefore, all the given options affect an FI's net interest income.

8-40 an FI's Net Interest Income Reflects