If All Interest Rates Decrease by 15 Basis Points, What

question 68

Multiple Choice

If all interest rates decrease by 15 basis points, what is the expected impact on the FI's net interest income? (Hint: Use the repricing model to answer this question.)

• A)+$150,000.
• B)-$150,000.
• C)-$750,000.
• D)+$750,000.
• E)No change. [Refer to: 8-99]

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Definitions:

Consolidated Shareholders' Equity

The total equity in a company, combining the equity holdings across all subsidiaries and the parent company.

Surplus (Deficit)

A financial situation where income exceeds expenditures (surplus) or expenditures exceed income (deficit) over a given period.

Unrealized Intercompany Profits

Profits that result from transactions between parent and subsidiary companies that have not yet been realized through sales to external parties.

Equity Method

An accounting technique used by companies to record their investments in other companies, adjusting the investment for the investor's share of the investee's profits or losses.