8-43 If Interest Rates Increase 75 Basis Points for an FI

question 9

Multiple Choice

8-43 If interest rates increase 75 basis points for an FI that has a gap of -$15 million,the expected change in net interest income is

• A)-$112,500.
• B)+$112,500.
• C)+$1,125,0000.
• D)-$1,125,0000.
• E)-$150,000.

---

Definitions:

Current Yield

The annual income (interest or dividends) divided by the current price of the security.

Semiannually

Occurring twice a year; typically every six months.

Subordinated Debt

A class of debt that is ranked below other debts with regard to claims on assets or earnings in the event of a liquidation of the issuer.

Payment Of Principal

The act of paying back the original amount borrowed in a loan, separate from interest payments.