8-52 an Increase in Interest Rates

question 1

Multiple Choice

8-52 An increase in interest rates

• A)increases the market value of the FI's financial assets and liabilities.
• B)decreases the market value of the FI's financial assets and liabilities.
• C)decreases the book value of the FI's financial assets and liabilities.
• D)increases the book value of the FI's financial assets and liabilities.
• E)has no impact on the market value of the FI's financial assets and liabilities.

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Definitions:

False Consensus Effect

A cognitive bias whereby people overestimate the degree to which their beliefs, opinions, preferences, values, and habits are normal and typical of those of others.

False Uniqueness Effect

The tendency of people to underestimate the commonality of their abilities and desirable or successful behaviors.

Base Rate Information

Statistical data that represents the general probability of an event or characteristic within a population.

False Consensus

The belief that one's own opinions, beliefs, or behaviors are more common in the general population than they actually are.