8-67 Suppose That Interest Rates Rise by 2 Percent on Both

question 27

Multiple Choice

8-67 Suppose that interest rates rise by 2 percent on both RSAs and RSLs.The expected annual change in net interest income of the bank is

• A)-$300,000.
• B)$500,000.
• C)-$2,800,000.
• D)-$3,000,000.
• E)$300,000.

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Definitions:

Arithmetic Average Return

The simple average of a series of returns generated over a period of time.

Variance

A statistical measurement of the dispersion of returns for a given security or market index, indicating volatility.

Time Horizon

The length of time over which an investment is expected to be held or a financial goal is to be achieved.

Standard Deviation

A measure of the dispersion or variability in a dataset, commonly used in finance to assess the volatility of an asset's returns over time.