Quote:
Originally Posted by GP_Matt
This may be a dumb question but why would a bank loan me money at 2.25% and then turn around and pay 5% interest on a preferred share?
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The bank has more than one revenue stream. Some (ex. your mortgage) pay 2.25%. Others will pay much more than 5% (ex. BS fees they charge for everything). The shares represent ownership in the bank. A small portion of the profits are being paid to the shareholders as dividends.