If Interest Rates Increase from 9 Percent to 10 Percent,a

question 91

Multiple Choice

If interest rates increase from 9 percent to 10 percent,a bank with a duration gap of 2 years would experience a decrease in its net worth of

• A)0.9 percent of its assets.
• B)0.9 percent of its liabilities.
• C)1.8 percent of its liabilities.
• D)1.8 percent of its assets.

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Definitions:

Period Cost

Expenses that are not directly tied to production and are expensed in the period they are incurred, such as selling, general, and administrative expenses.

Corporate Advertising

Corporate advertising is a marketing strategy aimed at promoting the brand image and reputation of the corporation as a whole, rather than focusing on individual products or services.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product cost.

Unit Product Cost

The total cost (both fixed and variable) associated with producing a unit of product, including direct materials, direct labor, and manufacturing overhead.