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.

---

Definitions:

Consumption Effects

The impact of consumer behavior on the economy, environment, and society, including both positive and negative consequences.

Product Cannibalization

A situation where a new product significantly reduces the sales or market share of the company's existing products.

Media Promotion

The use of various media channels, such as TV, radio, the internet, and social media, to advertise and promote a product, service, or brand to a wide audience.

Functionally Different

Describes products, services, or roles that serve different purposes or functions, catering to various needs or preferences.