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Question
A bank wishes to sell $350 million in new 30-day time deposits next month. Today interest rates are 7 percent. However, in the next month interest rates are expected to rise to 7.75 percent. What is the potential loss in profit for the month from this increase in interest rates? (Use a 360 day year)
A. $27.125 million
B. $24.500 million
C. $0.21875 million
D. $2.625 million
E. There is no potential loss from this increase
Answer
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