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question 45

Multiple Choice

Refer to the information below for questions
Formosa Independence Bank has the following balance sheet:

-If all interest rates on the two sides of balance sheet decline by 65 basis points, when other things are equal, what is the change in net interest income for Formosa Independence Bank over the year?

• A) $0
• B) $1,400,000
• C) -$1,400,000
• D) $1,592,500
• E) -$1,592,500

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Definitions:

Growing Annuity

A series of cash flows that grow at a constant rate for a finite number of periods.

Cash Flow Growth Rate

The rate at which a company's cash flow increases over a certain period, reflecting financial health and profitability potential.

Required Rate of Return

The minimum yearly percentage profit necessary for persuading individuals or corporations to invest in a particular security or initiative.

APR

The Annual Percentage Rate, a measure of the total cost of credit to the borrower on an annual basis, including interest and transaction fees.