Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk represents the risk of loss that may affect us due to adverse changes in financial market prices and interest rates.

As of December 31, 2016, we had $10.0 million in outstanding borrowings under the Credit Facility. Loans under the Credit Facility bear interest, at Tyler’s option, at a per annum rate of either (1) the Wells Fargo Bank prime rate (subject to certain higher rate determinations) plus a margin of 0.25% to 1.00% or (2) the 30, 60, 90 or 180-day LIBOR rate plus a margin of 1.25% to 2.00%.

In 2016, our effective average interest rate for borrowings was 1.79%. As of December 31, 2016 our interest rate was 1.96%. The Credit Facility is secured by substantially all of our assets.

Assuming borrowings of $10.0 million, a hypothetical 10% increase in our interest rate at December 31, 2016 for a one-year period would result in approximately $19,600 of additional interest rate expense.