Banks do more than just lend money—they have to handle the risks that come with lending. A tool called funds transfer pricing (FTP) helps them figure out, long before a deal is made, whether a loan is a good one or a deposit is worth gathering. In this chapter, we’ll build FTP from the ground up. We’ll start with the simple idea of matching every loan with a pretend funding source, then layer in costs for credit, shareholders’ capital, customer choices, and the need for ready cash.