The Average Duration of the Loans Is 10 Years If the Exchange Rate Remains the Same, What Is the Duration

question 28

Multiple Choice

The average duration of the loans is 10 years.The average duration of the deposits is 3 years. $$\begin{array} { | l | r | l | r | } \hline \text { Consumer loans } & \$ 50 \text { million } & \text { Deposits } & \$ 235 \text { million } \\\hline \text { Commercial Loans } & \$ 200 \text { million } & \text { Equity } & \$ 15 \text { million } \\\hline \text { Total Assets } & \$ 250 \text { million } & \text { Total Liabilities \& Equity } & \$ 250 \text { million } \\\hline\end{array}$$ If the exchange rate remains the same, what is the dollar spread earned by the bank at the end of the year?

• A)$750,000.
• B)$1,000,000.
• C)$1,250,000.
• D)$1,600,000.
• E)$1,750,000.

---

Definitions:

Structural Connectedness

The extent to which elements within a system or organization are interconnected, facilitating the flow of information or resources.

Innovation

The process of creating, developing, and implementing new ideas, processes, or products that bring significant improvements or create value.

Flexibility

The quality of being adaptable or variable, able to change or be changed according to circumstances.

Conservative Realism

An approach or mindset that emphasizes pragmatism and practicality, often prioritizing traditional methods and realism over radical changes or idealism.