If Rate-Sensitive Assets Equal $500 Million and Rate-Sensitive Liabilities Equals

question 17

Multiple Choice

If rate-sensitive assets equal $500 million and rate-sensitive liabilities equals $400 million, what is the expected change in net interest income if rates fall by 1%?

• A) Net interest income will increase by $1 million.
• B) Net interest income will fall by $1 million.
• C) Net interest income will increase by $10 million.
• D) Net interest income will fall by $10 million.
• E) Net interest income will be unchanged.

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Definitions:

Industry Comparison

Industry Comparison involves evaluating the performance, strategies, and metrics of companies within the same sector to gauge competitive standing and trends.

High-Risk

Describing investments or entities that offer the potential for higher returns but with a higher likelihood of loss or volatility.

Low-Risk

Refers to investments or financial situations that are expected to have a minimal chance of loss or decrease in value.

ROA

Return on Assets, a financial metric that shows the profitability of a company in comparison to its overall assets.