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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