Assume a Bank Has $200 Million of Assets with a Duration

question 122

Multiple Choice

Assume a bank has $200 million of assets with a duration of 2.5,and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent,the net worth of the bank falls by

• A)$1 million.
• B)$2.4 million.
• C)$3.6 million.
• D)$4.8 million.

Understand the concept of return on investment (ROI) and its calculation.

Identify and calculate the minimum required rate of return.

Analyze performance measurements, including margin and turnover.

Understand the effect of changes in sales, expenses, and assets on financial performance indicators.

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Definitions:

Total Row

A row at the end of a table or spreadsheet that automatically calculates and displays the sum, average, count, or other aggregate functions of numerical data in the table.

Sum Button

A tool typically found in spreadsheet software that automatically calculates the total of selected numbers or cells.

Secondary Key

A field in a database that is used for searching and retrieving records, not the primary means of record identification.

Primary Key

A unique identifier for each row in a database table, ensuring data integrity.