Question

The difference between the interest rates banks pay for deposits and the rates charged on loans is known as what?

Option 1: Profit Margin
Option 2: Interest Spread
Option 3: Rate Differential
Option 4: Capital Gain

Answer 1

The difference between the interest rates banks pay for deposits and the rates charged on loans is known as Interest Spread.

Step-by-step explanation:

Option 2: Interest Spread is the correct answer to the question. The difference between the interest rates banks pay for deposits and the rates charged on loans is known as the interest spread. It represents the profit margin for banks, as they earn money by lending at a higher interest rate than they pay on deposits.