If Interest Rates Decrease 40 Basis Points (0

question 90

Multiple Choice

If interest rates decrease 40 basis points (0.40 percent) for an FI that has a cumulative gap of -$25 million, the expected change in net interest income is

• A)+$100,000.
• B)-$100,000.
• C)-$625,000.
• D)-$250,000.
• E)+$250,000.

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Definitions:

Investment Account

An account held at a financial institution or brokerage that is used to hold securities, stocks, bonds, mutual funds, and other investments.

Proportionate Share

This refers to an investor's or shareholder's portion of profits, losses, or stock based on their percentage ownership in the company.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's income or losses.

Investment Revenue

Income generated from the holding of investments like stocks, bonds, real estate, and other assets.