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.

---

Definitions:

Variable Factory Overhead

Costs of production that fluctuate with the level of output, such as utility expenses and materials used in the manufacturing process, excluding direct labor and materials costs.

Fixed Factory Overhead

Costs associated with manufacturing that do not change with the level of production, such as salaries of supervisors and rent of the facility.

Sales Forecast

A sales forecast is the projection of the amount of revenue a company will generate through sales activities over a specific period.

Cash Receipts

Represents the money received by a business during a specific period, including revenues from sales, services, and loans.