Question 771 debt terminology, interest expense, interest tax shield, credit risk, no explanation
You deposit money into a bank account. Which of the following statements about this deposit is NOT correct?
(a) You have a debt asset.
(b) The bank sold you its promise to pay back interest and principal payments.
(c) The bank is exposed to your credit risk, it’s afraid that you’ll default on your debt.
(d) The interest income you’re paid is taxable income for you.
(e) The interest expense that the bank pays is tax-deductible for the bank.
Copyright © 2014 Keith Woodward