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Why would they offer 5%? Deposits effectively form a credit spread between the risk free rate (treasury bond) and what the bank pays depositors. Each additional
by mise_en_place 4y ago
Why would they offer 5%? Deposits effectively form a credit spread between the risk free rate (treasury bond) and what the bank pays depositors. Each additional basis point is netted to the bank as profit no? For example, the yield spread between a 2Y treasury bond w/ a coupon @ 4.25% and a savings acct APY @ 0.01% would be 4.24%.