An FI That Finances Long-Term Fixed Rate Mortgages with Short-Term

question 35

Multiple Choice

An FI that finances long-term fixed rate mortgages with short-term deposits is exposed to

• A)increases in net interest income and decreases in the market value of equity when interest rates fall.
• B)decreases in net interest income and decreases in the market value of equity when interest rates fall.
• C)decreases in net interest income and decreases in the market value of equity when interest rates rise.
• D)increases in net interest income and decreases in the market value of equity when interest rates rise.
• E)increases in net interest income and increases in the market value of equity when interest rates rise.

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