The balance sheet of an FI looks like

Asset Side

1. $75 million of Cash

2. $750 million of Loans earning 12% per year and having a duration of 1.75 years

3. $175 million of Treasuries earning 9% per year and having a duration of 7 years

Liability Side

1. $350 million of Time Deposits paying 7% per year and having a duration of 1.75 years

2. $575 million of CDs paying 8% per year and having a duration of 2.50 years

3. $75 million of Equity

If all interest rates decline 90 basis points (dR/(1 + R) = 90 basis points), what is the new capital to asset ratio?

a. 0.071 b. 0.851 c. 0.075 d. 0.078 e. 0.925