Multiple Choice
Hadbucks National Bank current balance sheet appears below. All assets and liabilities are currently priced at par and pay interest annually.
-What is the impact on the FI's equity of a 2 percent overall increase in market interest rates on all fixed-rate instruments?
A) Equity rises by $4.318 million.
B) Equity declines by $2.912 million.
C) Equity rises by $2.060 million.
D) Equity declines by $1.880 million.
Correct Answer:
Verified
Correct Answer:
Verified
Q39: The average maturity of the liabilities of
Q40: The term structure of interest rates assumes
Q42: Because of its simplicity,smaller depository institutions still
Q43: If an FI's repricing gap is less
Q45: The following is the balance sheet of
Q47: The market segmentation theory of the term
Q48: The balance sheet of XYZ Bank appears
Q51: A positive repricing gap implies that a
Q69: If the interest rate spread between rate
Q70: Large banks have adopted interest rate risk