If Interest Rates on Both Assets and Liabilities Rise by 2

question 147

Multiple Choice

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

• A)It should rise by 0.60 percent.
• B)It should rise by 2 percent.
• C)It should rise by 4 percent.
• D)It should rise by 1 percent.
• E)It should not show any rise.

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Definitions:

Average Total Costs

The sum of all production costs divided by the quantity of output produced, representing the per-unit cost of production.

Average Variable Cost

The total variable costs (costs that change with output level) of production divided by the quantity of output produced.

Fixed Costs

Fixed costs are business expenses that remain unchanged regardless of the level of goods or services produced, such as rent, salaries, and insurance premiums.

Variable Cost

Costs that vary directly with the level of production or sales, such as raw materials and labor expenses.