Assuming that the average duration of its assets is five years, while the average duration of its liabilities is three years, then a 5 percentage point increase in interest rates will cause the net worth of First National to decline by ________ of
the total original asset value. A) 5 percent
B) 10 percent
C) 15 percent
D) 25 percent
B
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How much do outputs increase when labor and capital increase from 1 to 2 units for the following production function , q = 10L0.5K0.3?
A) 7.4 units. B) 7 units. C) 8 units. D) None of the above.
The quantity of money that households and businesses will demand
a. increases if income falls but decreases if interest rates rise. b. increases if income falls and increases if interest rates rise. c. decreases if income falls but increases if interest rates rise. d. decreases if income falls and decreases if interest rates rise.
The proponents of adaptive expectations believe that
a. there will be a substantial time lag before people anticipate the effects of a shift to a more expansionary macro-policy. b. macro-policies that stimulate demand and place upward pressure on the general level of prices will temporarily increase output and employment. c. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy. d. all of the above are true.
Compared to 1981, the poor now pay a
A. larger fraction of their income in taxes than the top 10 percent of income earners. B. smaller fraction of their income in federal taxes. C. larger fraction of their income in taxes than the middle 50 percent of income earners. D. larger fraction of their income in federal taxes.