Multiple Choice
The average interest earned on the loans is 6 percent and the average cost of deposits is 5 percent.Rising interest rates are expected to reduce the deposits by $3 million.Borrowing more debt will cost the bank 5.5 percent in the short term.
What will be the size of the bank if a stored liquidity management strategy is adopted?
A) $9 million.
B) $11 million.
C) $12 million.
D) $14 million.
Correct Answer:
Verified
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