If the Interest Rate on a Bank's Liabilities Rises Without

question 76

Multiple Choice

If the interest rate on a bank's liabilities rises without an increase in asset interest rates, the bank's:

• A)equity ratio falls.
• B)return on assets rises.
• C)profits fall.
• D)All of the Answer s are correct.

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Definitions:

Social Security Tax

A tax that funds the Social Security program, which provides retirement, disability, and survivors' benefits.

Salary

Regular payments usually made monthly or bi-weekly to an employee, often annualized, for performing a job.

Payroll Taxes

Levies charged to both employers and workers, determined as a proportion of the wages that businesses distribute to their personnel.

Federal Government

The national government of a federated state, which holds the authority to govern at a national level as distinct from regional or local levels.