The Following Is an FI's Balance Sheet ($Millions)

question 114

Multiple Choice

The following is an FI's balance sheet ($millions) .

Notes to Balance Sheet.

Munis are 2-year 6 percent annual coupon municipal notes selling at par. Loans are floating rates, repriced quarterly. Spot discount yields for 91-day Treasury bills are 3.75 percent. CDs are 1-year pure discount certificates of deposit paying 4.75 percent.

-What will be the impact,if any,on the market value of the bank's equity if all interest rates increase by 75 basis points?

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Definitions:

Statement of Cash Flows

A financial report detailing the cash inflows and outflows from operating, investing, and financing activities of a company over a period.

Borrowing

The act of receiving something from someone with the intention of returning it or its equivalent.

Increasing Assets

Refers to the growth or escalation in the value of assets owned by a business or individual.

Accrued Expenses

Costs that have been incurred but not yet paid for, recognized under the accrual basis of accounting.