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Suppose Big Bank offers an interest rate of 9.5% on both savings and loans, and...

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Finance

Suppose Big Bank offers an interest rate of 9.5% on both savings and loans, and Bank Enn offers an interest rate of 10.0% 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?
a. What profit opportunity is available?
A. Take a loan from Big Bank at 10.0% and save the money in Big Bank at 9.5%.
B. Take a loan from Big Bank at 9.5% and save the money in Bank Enn at 10.0%.
C. Take a loan from Bank Enn at 10.0% and save the money in Big Bank at 9.5%.
D. Save at both banks.
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