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

question 48

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.
-Because of a new program called Kash for Klunkers,SFTSL experiences a rash of auto loan prepayments,reducing the size of the auto loan portfolio from $200 million to $100 million and increasing the cash reserves to $200 million.After these prepayments,the duration of SFTSL's equity is closest to:

• A)6 years.
• B)8 years.
• C)10 years.
• D)14 years.

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Definitions:

Actual Problem

An issue currently existing and requiring immediate attention or intervention to mitigate adverse effects.

Performance Criteria

The specific standards or expectations that define the quality or success of a task, activity, or project.

Outcome Statements

Specific descriptions of the desired or expected results following a healthcare intervention, procedure, or treatment.

Patient

An individual who is receiving medical care or treatment from healthcare professionals.