A Bank Has an Interest Rate Spread of 150 Basis

question 12

Multiple Choice

A bank has an interest rate spread of 150 basis points on $30 million in earning assets funded by interest-bearing liabilities. However,the interest rate on its assets is fixed and the interest rate on its liabilities is variable. If all interest rates go up 50 basis points,the bank's new pretax net interest income will be ________.

• A)$600,000
• B)$450,000
• C)$300,000
• D)$250,000
• E)$175,000

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Definitions:

Field Dependence/Independence

A cognitive style that describes individuals' tendency to rely on or disregard the surrounding context in processing information.

Reflectivity/Impulsivity

A cognitive style dimension referring to the way individuals trade off speed and accuracy of responding.

Working Memory

A cognitive system that holds information temporarily for processing and manipulation, crucial for reasoning and guidance of decision-making and behavior.

Older Adults

Individuals typically defined as being aged 65 years and older, often with considerations for their social, health, and cognitive changes.