Stilwater Bank and Trust Company has an average asset duration of 3.25 years and an average liability
Question:
Stilwater Bank and Trust Company has an average asset duration of 3.25 years and an average liability duration of 1.75 years. Its liabilities amount to $485 million, while its assets total $512 million. Suppose that interest rates were 7 percent and then rise to 8 percent. What will happen to the value of the Stilwater bank's net worth as a result of a decline in interest rates?
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Step by Step Answer:
First we need an estimate of Stilwaters duration gap This is Then t...View the full answer
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Related Book For 
Bank Management and Financial Services
ISBN: 978-0078034671
9th edition
Authors: Peter Rose, Sylvia Hudgins
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