8-44 If interest rates decrease 40 basis points (0.40 percent)for an FI that has a cumulative gap of -$25 million,the expected change in net interest income is
A)+$100,000.
B)-$100,000.
C)-$625,000
D)-$625,000.
E)+$250,000.

Question

Quizplus · Accepted Answer

A decrease in interest rates will increase net interest income for an FI with a negative cumulative gap. The change is calculated as -$25 million * -0.004 = +$100,000.

8-44 If Interest Rates Decrease 40 Basis Points (0