If the Loan Portfolio Consists of Five-Year,10 Percent Annual Coupon

question 7

Multiple Choice

$\begin{array}{lccc} \text { Securities (at par) } & \text { \$ 250 Deposits}& \$975 \\ \text { Loans (at par) } & \text { \$ 760 Capital} & \$ 35\end{array}$
If the loan portfolio consists of five-year,10 percent annual coupon par value loans,what is the market,or economic,value of capital if interest rates decrease 2 percent?

• A)$35 million.
• B)$96 million.
• C)$60 million.
• D)-$7 million.

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Definitions:

Meditation

Mental series of exercises meant to refocus attention and achieve a trancelike state of consciousness.

Mental Exercises

Activities designed to improve cognitive functions such as memory, focus, and problem-solving skills.

Trancelike State

A state of deep relaxation or hypnosis in which an individual may be more open to suggestions and less aware of their surroundings.

Activation-information-mode Model

A theory suggesting that dreams are initiated in the brain's pons and that their content is affected by the dreamer's personal life and experiences.