select the correct statement and rationale relating the interest rates of online banks to those of…

select the correct statement and rationale relating the interest rates of online banks to those of traditional banks. a. online banks offer greater interest rates than traditional banks because they are more risky. b. online banks offer greater interest rates than traditional banks because they have lower overhead costs. c. online banks offer lower interest rates than traditional banks because they have not had enough time to establish themselves. d. online banks offer lower interest rates than traditional banks because that is the cost of convenience.

select the correct statement and rationale relating the interest rates of online banks to those of traditional banks. a. online banks offer greater interest rates than traditional banks because they are more risky. b. online banks offer greater interest rates than traditional banks because they have lower overhead costs. c. online banks offer lower interest rates than traditional banks because they have not had enough time to establish themselves. d. online banks offer lower interest rates than traditional banks because that is the cost of convenience.

Answer

Brief Explanations:

Online banks often have lower overhead costs as they don't need to maintain physical branches with associated expenses like rent, utilities for large - scale physical spaces etc. To attract customers, they can offer higher interest rates. Option a is incorrect as risk is not the main reason for higher interest rates. Option c is wrong as time of establishment is not the key factor for interest rate differences. Option d is incorrect as convenience is not the reason for lower interest rates; in fact, online banks often offer higher rates.

Answer:

B. Online banks offer greater interest rates than traditional banks because they have lower overhead costs.