What is Cost of Funds and how is it determined? Is there any index guideline for each of the main currencies?
The formula for a Cost of Funds may vary at different banks, but generally it represents what the cost was for that loan. The bank would base this cost at least in part on what they are paying on money market accounts, passbooks, CDs, and other liabilities, as well as any borrowing costs the bank may have to get additional lendable funds. Some may add a general overhead cost as well since buildings and people have a real cost.
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The formula for a Cost of Funds may vary at different banks, but generally it represents what the cost was for that 