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Suppose Big Bank offers an interest rate of 6.06.0% on both savings and loans, and...

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Question

Finance

Suppose Big Bank offers an interest rate of

6.06.0%

on both savings and loans, and Bank Enn offers an interest rate of

6.56.5%

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?

Answer & Explanation Solved by verified expert
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