A Thrift Makes Long-Term Fixed-Rate Mortgages Funded with Short-Term Deposits

question 43

Multiple Choice

A thrift makes long-term fixed-rate mortgages funded with short-term deposits and then interest rates rise. Which of the following is true?

• A) Profitability would decline.
• B) Profitability would increase.
• C) The market value of equity increases.
• D) Interest income would fall.
• E) Both B and C would occur.

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Definitions:

Communal Cultures

Societies or groups that emphasize the collective over the individual and value shared responsibilities and resources.

Individualistic Societies

Societies characterized by a focus on personal independence and individual rights, often at the expense of community and collective well-being.

Racial Groups

Categories of humans identified by shared physical characteristics or genetics, often associated with historical, social, and political implications.

Country Music

A genre of popular music that originated in the rural regions of the Southern United States in the early 20th century.