The Numbers Provided Are in Millions of Dollars and Reflect

question 99

Multiple Choice

The numbers provided are in millions of dollars and reflect market values: What is the effect of a 100 basis point increase in interest rates on the market value of equity of the FI? Use the duration approximation relationship. Assume r = 4 percent.

• A)-27.56 million.
• B)-28.01 million.
• C)-29.85 million.
• D)-31.06 million.
• E)-33.76 million.

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Definitions:

Insurance Policy

A contract between an insurance policyholder and an insurer, outlining the claims which the insurer is legally required to pay in exchange for an initial payment, known as a premium.

Long-Term Investment

An investment strategy or vehicle designed to hold or grow funds over an extended period, usually several years or longer.

Significant Influence

The capacity to affect the financial and operating policies of another entity through ownership or other means.

Operating Policies

Rules and guidelines that govern the activities and decisions of an organization.