The formula of interest spread benefit is as follows:

Interest spread benefit is usually a concept used in investment and loan, which describes the difference between interest income and interest expenditure. Suppose the interest income is I_r and the interest expense is I _ e. The formula of spread interest can be simply expressed as follows: spread interest = interest income-interest expenditure is expressed by mathematical symbols: spread interest = I _ R-I _ E.

this formula tells us that to calculate the interest spread, we only need to know the amount of interest income and interest expenditure. Interest income usually comes from investments, such as bank deposits, bonds, stocks, etc., while interest expenses are generated by borrowing or issuing bonds.

Purpose of spread interest:

1. Assess the profitability of financial institutions: For a financial institution, such as a bank, insurance company or investment fund, spread interest is an important part of its income. By calculating and analyzing the interest spread, we can evaluate the profitability of the institution in capital operation.

if the interest income is greater than the interest expense, the institution will realize a positive interest spread, which means that it is profitable in capital operation. On the contrary, if the interest expense is greater than the interest income, then it has achieved negative interest spread, which means that it is losing money in capital operation.

2. Evaluate the profitability of investment projects: Interest spread can also be used to evaluate the profitability of investment projects. If the expected interest income of a project is greater than its expected interest expenditure, then the project may be profitable.

for example, when evaluating a bond investment, we can compare the interest income of the bond with the capital cost (i.e. interest expense) required for purchasing the bond. If the interest income of a bond is greater than the cost of capital, then investing in the bond may produce positive interest spread.

3. Analysis of monetary policy and financial market: Interest spread is also an important indicator in the analysis of monetary policy and financial market. The central bank may affect the money supply and credit cost in the economy by adjusting interest rates, and then affect consumption, investment and economic growth.

In addition, investors in the financial market will also pay close attention to the change of interest spread to evaluate investment opportunities and risks. For example, if interest rates are expected to rise in the future, the price of long-term bonds may fall because investors can get higher interest income from new high-interest bonds.