A Change in Net Interest Income Would Occur When

question 92

Multiple Choice

A change in net interest income would occur when:

• A) the composition of the assets of the bank change.
• B) the average asset yield changes.
• C) the volume of the assets of the bank change.
• D) the average interest expense changes.
• E) All of the above

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Definitions:

Federal Reserve District Banks

The 12 regional banks in the Federal Reserve System which oversee and regulate banking institutions within specific geographic areas of the US.

Discount Rate

The interest rate charged by central banks on loans to commercial banks or the rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Excess Reserves

The amounts of cash banks hold in their vaults or deposit at the central bank which exceed the regulatory requirements.

Money Supply

The entire financial capacity of an economy, taking into account cash, coins, and the amounts in both checking and savings accounts, at a specific point in time.