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A financial institution has equity equal to one-tenth of its assets. If its asset duration is currently equal to its liability duration, then to immunize,

A financial institution has equity equal to one-tenth of its assets. If its asset duration is currently equal to its liability duration, then to immunize, the firm needs to:

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1. decrease the duration of its assets.

2. do nothing, i.e., keep the duration of its liabilities equal to the duration of its assets.

3. increase the duration of its assets.

4. decrease the duration of its liabilities.

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