Question

In a bank deposit, why might the rate of return for the savings bank account be lower than the interest rate the bank receives in the call market?

a.

Bank deposits have fixed rates

b.

The bank keeps savings deposits outside the market

c.

Call market rates are not applicable to banks

d.

Savings bank depositors control market conditions

Posted under IC 89 Management Accounting

Answer: (b).The bank keeps savings deposits outside the market Explanation:Savings bank depositors remain outside the market, accepting a fixed rate of return, while the bank engages in the market based on demand and supply, influencing call market rates.

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Q. In a bank deposit, why might the rate of return for the savings bank account be lower than the interest rate the bank receives in the call market?
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