What Is the Change in the Value of Its Assets

question 22

Multiple Choice

What is the change in the value of its assets if all interest rates decrease by 1 percent?

• A)Approximately $1.613 million.
• B)Approximately $2.297 million.
• C)Approximately -$1.937 million.
• D)Approximately $2.209 million.
• E)Approximately $2.524 million.

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are legally required to keep as reserves, either in their vaults or with the central bank.

Money Supply

The aggregate volume of currency resources present in an economy at any given time, covering cash, coins, and the funds in checking and savings accounts.

Fed

Short for the Federal Reserve System, which is the central banking system of the United States responsible for monetary policy.

Government Securities

Debt instruments issued by a government to finance its expenditures, offering a return to investors.