Cost of Funds

Posted in Finance, Accounting and Economics Terms, Total Reads: 1207

Definition: Cost of Funds

Cost of Funds are the costs which a firm must incur to gain access to capital. For example the interest to be incurred to used loan funds- both personal and business loans; floatation costs of issuing stocks; brokerage, commission etc. It is the expenditure which any institution is obligated to pay in return for using money.

Any financial institution passes on this cost of funds incurred to the loan recipient. It impacts not only to financial institution but also to other companies that frequently borrow funds.

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