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3. Douglas Bank has a balance sheet as below: Assets Liabilities and Equity Reserves $5m Chequable deposits $25m Securities $10m Term deposits $40m Loans $60m

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3. Douglas Bank has a balance sheet as below: Assets Liabilities and Equity Reserves $5m Chequable deposits $25m Securities $10m Term deposits $40m Loans $60m Equity capital $10m The manager estimates the average duration of assets to be 3 years, and average duration of liabilities to be 2 years. Now market interest rate rises from 4% to 5%. What will be the change of this bank's net worth? Show your calculation

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