What banks pay to fund their loans is know as?
Loan costs
Fixed costs
Cost of Funds
Funding Fixed Costs
Answer
Cost of Funds
This is basically the rate paid by financial institutions for the funds that they deploy in their business which is one of the most important input costs and banks use it to fund their loans
Explanation
this is because, generally, the cost of funds is the interest rate paid by financial institutions for the funds that they deploy in their business which is one of the most important input costs for a financial institution like banks because it helps generate better returns when the funds are used for short term and even long term loans to borrowers
