Learn Before
Bank's Payments to Depositors Formula
A bank's primary cost is the interest it must pay to its depositors. This amount is determined by multiplying the total value of all deposits held by the bank by the interest rate it offers on those deposits. The formula is:
0
1
Tags
Economics
Economy
Introduction to Macroeconomics Course
Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
CORE Econ
Social Science
Empirical Science
Science
Related
Loan Repayment with 10% Interest in the Marco-Julia Model
Interest Rate Calculation Formula
Bank's Payments to Depositors Formula
Annual Interest Rate
The Price of Immediate Purchase
An individual lends a friend $500. The agreement is that the friend will repay the full $500 plus an additional $25 one year later. What is the annual interest rate on this loan?
The Dual Role of the Interest Rate
A large-scale agricultural operation uses a potent pesticide to maximize crop yield and profits. Runoff from the fields carries this pesticide into a nearby river, leading to a significant decline in the fish population, which harms the local fishing industry. Which statement best breaks down the economic effects of this situation?
A small bakery takes out a one-year loan of $100,000 to purchase a new industrial oven. At the end of the year, the bakery must repay the lender a total of $105,000. Which statement best analyzes the role of the interest rate in this transaction?
A company borrows $20,000 to finance a new project. One year later, it repays the lender a total of $21,400. How should the components of this repayment be analyzed from an economic perspective?
The Price of Borrowing
The interest rate on a loan is defined as the total additional fixed monetary amount a borrower must repay, regardless of the size of the original loan.
A student is considering four different one-year loan offers to purchase a new laptop. Based on the definition of an interest rate as the price of borrowing, which offer represents the highest cost for bringing purchasing power forward in time?
A business takes out a one-year loan of $10,000. At the end of the year, they repay the lender a total of $10,600. Match each component of this transaction to its correct economic description.
Bank's Profit from Interest Rate Spread in the Marco-Julia Model
Learn After
A commercial bank holds $250,000,000 in customer deposits. If the bank offers an annual interest rate of 3% on these deposits, what is the total amount the bank must pay to its depositors over one year?
Calculating a Bank's Deposit Interest Rate
Analyzing a Bank's Interest Expense
If a bank's total deposits double from $50 million to $100 million, while the interest rate it offers on these deposits is halved from 4% to 2%, the bank's total annual payments to its depositors will also double.
A financial analyst is reviewing the annual interest expenses for four different banks. Match each bank with its correct total annual payment to depositors based on the provided data.
A community bank holds $80,000,000 in deposits from its customers. If the bank offers an annual interest rate of 1.5% on these deposits, its total annual payment to depositors will be $____.
A bank needs to determine its total annual interest expense on customer deposits. Arrange the necessary actions into the correct logical sequence to arrive at the final amount.
Strategic Response to Competitive Pressure on Deposit Rates
A bank holds $200 million in total deposits and offers a 2% annual interest rate. To remain competitive, the bank's management is considering two proposals.
- Proposal A: Increase the annual interest rate to 2.5% on the current deposit base.
- Proposal B: Keep the rate at 2% but launch a campaign expected to increase total deposits to $250 million.
Which of the following statements accurately analyzes the impact of these proposals on the bank's annual payments to depositors?
Evaluating a Bank's Cost Reduction Strategy
Bank's Profit from Interest Rate Spread in the Marco-Julia Model