If Interest Rates on Both Assets and Liabilities Decrease by 2

question 155

Multiple Choice

If interest rates on both assets and liabilities decrease by 2 percent in the next 90 days,what should happen to this bank's net interest margin?

• A)It should fall by 2 percent.
• B)It should fall by 0.6 percent.
• C)It should fall by 4 percent.
• D)It should fall by 1 percent.
• E)It should not show any fall.

---

Definitions:

Liquidation

The process of winding up a company’s financial affairs by selling off assets to pay creditors and distributing any remaining assets to shareholders.

Liquidation Expenses

Liquidation Expenses are the costs associated with dissolving a company, including paying off debt, selling assets, and compensating employees and creditors.

Profit and Loss Allocation

Profit and Loss Allocation involves distributing a business’s profits and losses among its various stakeholders or business areas.