Use the Following Information to Answer the Question(s)below

question 35

Multiple Choice

Use the following information to answer the question(s) below.
You are a risk manager for Security First Trust Savings and Loan (SFTSL) .SFTSL's balance sheet is as follows (in millions of dollars) : The duration of the auto loans is three years and the duration of the mortgages is eight years.Both cash reserves and checking and savings have zero duration.The CDs have a duration of two years and the long-term financing has a ten-year duration.
-If interest rates are currently 5%,but fall to 4%,your estimate of the approximate change in SFTSL equity is closest to:

• A)8% decrease.
• B)12% decrease.
• C)8% increase.
• D)14% increase.

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Definitions:

American Southwest

A geographical region in the United States characterized by arid deserts, unique cultures, and significant historical landmarks.

1920s

A decade characterized by dramatic social and political change, economic prosperity in the United States, and the rise of jazz music and the flapper subculture.

Emergence

The process of coming into being or of becoming prominent or important, often used in the context of ideas, trends, or phenomena.

Ku Klux Klan

A white supremacist hate group in the United States, originally founded in the aftermath of the Civil War, known for promoting racism, anti-Semitism, and xenophobia.