Multiple Choice
Which of the following statements is true?
A) An increase in interest rates will benefit the FI since the increase in the market value of assets will be greater than the increase in the market value of liabilities.
B) An increase in interest rates will harm the FI since the increase in the market value of assets will be greater than the increase in the market value of liabilities.
C) An increase in interest rates will harm the FI since the decrease in the market value of assets will be greater than the decrease in the market value of liabilities.
D) A decrease in interest rates will harm the FI since the increase in the market value of assets will be greater than the increase in the market value of liabilities.
E) A decrease in interest rates will benefit the FI since the increase in the market value of assets will be smaller than the increase in the market value of liabilities.
Correct Answer:
Verified
Correct Answer:
Verified
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