11-87 Which of the Following Completes the Statement: All Else

question 104

Multiple Choice

11-87 Which of the following completes the statement: All else equal,the higher the duration of a loan,

• A)the lower the current level of interest rates,the higher the RAROC.
• B)the lower the expected change in risk premium,the lower the RAROC.
• C)the higher the expected change in risk premium,the higher the RAROC.
• D)the higher the loan amount,the lower the RAROC.
• E)the lower the loan amount,the lower the RAROC.

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Definitions:

Annual Interest

The amount of interest due over the course of a year on a loan or investment, calculated as a percentage of the principal.

Bank Account

A financial account maintained by a bank for a customer, allowing for the management, deposit, and withdrawal of funds.

Payment Stream

A series of periodic payments that may be constant or variable, over time, often associated with loans or investments.

Discount Rate

In finance, the interest rate used to determine the present value of future cash flows, or in central banking, the rate charged to commercial banks for loans from the central bank.