8-50 the Repricing Model Measures the Impact of Unanticipated Changes

question 19

Multiple Choice

8-50 The repricing model measures the impact of unanticipated changes in interest rates on

• A)the market value of equity.
• B)net interest income.
• C)both market value of equity and net interest income.
• D)the FI's capital position.
• E)the prices of assets and liabilities.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Net Operating Income

The income generated from normal business operations, calculated by deducting operating expenses from gross income.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Fixed Costs

Costs that remain constant in total regardless of changes in the level of the business activity or production volume.