Use the Following Information to Answer the Question(s)below

question 48

Multiple Choice

Use the following information to answer the question(s) below.
You are a risk manager for Security First Trust Savings and Loan (SFTSL) .SFTSL's balance sheet is as follows (in millions of dollars) : The duration of the auto loans is three years and the duration of the mortgages is eight years.Both cash reserves and checking and savings have zero duration.The CDs have a duration of two years and the long-term financing has a ten-year duration.
-Because of a new program called Kash for Klunkers,SFTSL experiences a rash of auto loan prepayments,reducing the size of the auto loan portfolio from $200 million to $100 million and increasing the cash reserves to $200 million.After these prepayments,the duration of SFTSL's equity is closest to:

• A)6 years.
• B)8 years.
• C)10 years.
• D)14 years.

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Definitions:

Neuroticism

A personality trait characterized by sadness, moodiness, and emotional instability.

Extroversion

A personality trait typified by outgoingness, high energy, and a preference for social interaction.

Phrenologist

A practitioner of phrenology, a now-discredited study and theory which posited that the bumps on the skull could predict mental traits and character.

Personality

The combination of characteristics or qualities that form an individual's distinctive character.