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8 ) Suppose a bank with $ 5 0 0 million in assets has an average asset duration of 3 years, and an average liability
Suppose a bank with $ million in assets has an average asset duration of years, and an average liability duration of year. The bank also has a total debt ratio of R may be thought of as the required return on equity or perhaps as the average interest rate level. If R is and the bank is expecting a basis point increase in interest rates within next months, by How much will the equity value change?
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