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3. Suppose Big Bank offers an interest rate of 5.5% on both savings and loans, and Bank Enn offers an interest rate of 6% on both savings and loans. a. What profit opportunity is available? b. Which bank would experience a surge in the demand for loans? Which bank would receive a surge in deposits? c. What would you expect to happen to the interest rates the two banks are offering?

Respuesta :

Answer and Explanation:

The explanation is shown below:

a. The profit opportunity i.e. available is take the loan from bank B at 5.5% and the money would be saved in Bank E at 6%

b. The Bank B would be surge in the loan demands while Bank E would be surge in deposits

c. The rate of interest would be increased in Bank B and the rate of interest would be decreased in Bank E

So the same is to be considered

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