Consider a bank with assets that can be represented by the zero-coupon bond

and liabilities that can be represented by the zero-coupon bond

Which of the following expressions gives the interest rate separating solvency from technical insolvency (i.e., Equity=0)

Consider a bank with assets that can be represented by the zero- coupon bond assets = Axe-rita and liabilities that can be represented by the zero-coupon bond liabilities = L x e-tt. Which of the following expressions gives the interest rate separating solvency from technical insolvency (i.e., Equity = 0)? 0 r = (ta t) In (1) Orato (4) o None of the choices given is correct. 0,= (ta tz) L (1) r=