From a Regulatory Perspective, What Is the Impact on Book

question 19

Multiple Choice

From a regulatory perspective, what is the impact on book value capital of a 25 basis point decrease in interest rates if the FI is holding a year, fixed-rate, 11 percent annual coupon $100,000 par value bond?

• A)A decrease of $250.
• B)An increase of $250.
• C)An increase of $2,023.
• D)A decrease of $1,959.
• E)No impact on capital since the book value is unchanged.

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