The Average Duration of the Loans Is 10 Years

question 127

Multiple Choice

The average duration of the loans is 10 years. The average duration of the deposits is 3 years. What is the change in the value of the FI's equity for a 1 percent increase in interest rates from the current rates of 10 percent ?

• A)-$,979,091.
• B)-$16,318,182.
• C)-$15,979,091.
• D)+$16,318,182.
• E)+$979,091.

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Definitions:

Mood

A temporary state of mind or feeling that influences an individual's emotional state and perceptions.

Emotion

A complex psychological state involving feelings, physiological changes, and an external expression, often triggered by a thought or experience.

James-Lange Theory

A theory of emotion that suggests emotions arise from physiological reactions to external events before they are mentally processed.

Evolutionary Theory

Evolutionary theory is a scientific explanation for the unity and diversity of life on Earth, proposing that all species of organisms arise and develop through natural selection of small, inherited variations.