Question
Assume that the average duration of its assets is 2.5 years, while the average duration of its liabilities is 0.8 years. According to the duration
-
Assume that the average duration of its assets is 2.5 years, while the average duration of its liabilities is 0.8 years. According to the duration gap model, what size of interest rate change will make the bank insolvent if rates are currently 3%?
A decline of 5.25%
A decline of 4.85%
An increase of 4.67%
An increase of 3.98%
Assume that the average duration of its assets is 2.5 years, while the average duration of its liabilities is 0.8 years. According to the duration gap model, what size of interest rate change will make the bank insolvent if rates are currently 3%?
| A decline of 5.25% | ||
| A decline of 4.85% | ||
| An increase of 4.67% | ||
| An increase of 3.98% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Horngrens Cost Accounting A Managerial Emphasis
Authors: Srikant M. Datar, Madhav V. Rajan
16th edition
134475585, 978-0134475998, 134475992, 978-0134475585
