Assume an FI Has $50 000 in Assets and $45

question 68

Multiple Choice

Assume an FI has $50 000 in assets and $45 000 in liabilities.Which of the following statements is true if interest rates on both assets and liabilities increase simultaneously?

• A)As the interest rate for both assets and liabilities increase the value of the FI's net worth will remain constant.
• B)As the interest rate for both assets and liabilities increase the value of the FI's assets and liabilities will both decrease.
• C)As the interest rate for both assets and liabilities increase the value of the FI's assets and liabilities will both increase.
• D)As the interest rate for both assets and liabilities increase the value of the FI's assets and liabilities will both increase; however, as the FI has more assets than liabilities, the increase in the value of the FI's assets will be greater than the increase in the value of its liabilities.

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Definitions:

Papillae

Small, nipple-like structures on the tongue where taste buds reside, playing a key role in the sense of taste.

Taste Buds

Small sensory organs found on the tongue, capable of detecting the five types of tastes: sweet, sour, salty, bitter, and umami.

Microvilli

Small, finger-like projections from the surface of some cells which increase the surface area for absorption or secretion.

Sensorineural Hearing

A type of hearing loss resulting from damage to the inner ear or to the nerve pathways from the inner ear to the brain.