Consider the Following Table: How Does an Increase in the Average

question 52

Multiple Choice

Consider the following table: How does an increase in the average one-year interest rate of 50 basis points affect the FI's future net interest income?

• A)The NII will not change.
• B)The NII will increase by $50.
• C)The NII will increase by $5.
• D)The NII will decrease by $50.

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Definitions:

Financial Decisions

Choices regarding the management of finances of an entity, including investment, budgeting, borrowing, and saving activities.

Cash Flow

The complete sum of cash moving in and out of a company, influencing its ability to cover short-term obligations.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used to assess liquidity and manage cash flow.

Fixed Asset Turnover Ratio

A financial metric that measures how efficiently a company is using its fixed assets to generate sales.