If Problem Loans Reduce the Market Value of the Loan

Multiple Choice

$\begin{array}{lccc} \text { Securities (at par) } & \text { \$ 250 Deposits}& \$975 \\ \text { Loans (at par) } & \text { \$ 760 Capital} & \$ 35\end{array}$
If problem loans reduce the market value of the loan portfolio by 25 percent,what is the value of regulatory defined (book value) capital?

A) $35 million.
B) -$155 million.
C) $7 million.
D) -$7 million.