ECONOMICS

Detailed explanation-1: -When you define balance segments as a percentage of the balance, the calculation is very straightforward: the base funds transfer pricing rate is calculated as the sum of all of the balance percentages for each segment multiplied by the funds transfer pricing rate for that segment.

Detailed explanation-2: -Funds transfer pricing (FTP) is a system used to estimate how funding is adding to the overall profitability of a company. FTP sees its most significant use in the banking industry where financial institutions use FTP as a way to analyze the strengths and failings of the firm within the institution.

Detailed explanation-3: -Transfer pricing is a mechanism for dividing the net interest income of a financial institution (such as a bank) among its constituent business units (such as the deposit, treasury, and the credit groups).

Detailed explanation-4: -Fund transfer pricing (FTP) is a process used in banking to measure the performance of different business units of a bank.