If the Relative Change in Interest Rates Is a Decrease

question 109

Multiple Choice

If the relative change in interest rates is a decrease of 1 percent, calculate the impact on the bank's market value of equity using the duration approximation. (That is, ΔR/(1 + R) = -1 percent)

• A)The bank's market value of equity increases by $325,550.
• B)The bank's market value of equity decreases by $325,550.
• C)The bank's market value of equity increases by $336,500.
• D)The bank's market value of equity decreases by $336,500.
• E)There is no change in the bank's market value of equity. [Refer to: 9-108]

---

Definitions:

Dream Analysis

A therapeutic technique, often used in psychoanalysis, which interprets the content of dreams to uncover underlying thoughts and feelings.

Identity Crisis

The failure to achieve ego identity during adolescence.

Foreclosure Status

In psychology, particularly Eriksonian theory, foreclosure status refers to an uncritical acceptance of parental or societal values without exploring personal identity.

Moratorium Status

A stage in identity development where an individual is actively exploring options but has not yet made a commitment to any particular identity or path.