If First State Bank Has a Gap Equal to a Positive

question 18

Multiple Choice

If First State Bank has a gap equal to a positive $20 million,then a 5 percentage point drop in interest rates will cause profits to

• A) increase by $10 million.
• B) increase by $1.0 million.
• C) decline by $10 million.
• D) decline by $1.0 million.

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Definitions:

Products

Substances resulting from a chemical reaction, process, or biological pathway.

Glucose

A simple sugar that is an important energy source in living organisms and is a component of many carbohydrates.

Carbon Dioxide

A gas that lacks both color and odor, produced from the combustion of carbon and organic elements, and through respiratory activities, captured by plants for their photosynthesis process.

FADH2

A reduced form of flavin adenine dinucleotide, a coenzyme involved in the respiratory chain that transfers electrons.