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.

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Definitions:

Stock Plans

Stock plans are arrangements by a company to grant equity options or shares to employees as part of their remuneration package, aiming to align employees' interests with those of the shareholders.

Private Corporations

Businesses that are owned privately, not by the government, and are run to make a profit for their owners or shareholders.

Scanlon Plan

A gain-sharing program that incentivizes employees to improve productivity through rewards that are based on saved labor costs.

Gain-sharing

An incentive scheme that rewards employees for their contributions to a company's productivity improvement by sharing the financial gains.