Question
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
- 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 banks net worth? Show your calculation.
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Dynamics Of International Finance
Authors: Ruchi Mehrotra Joshi
1st Edition
1685078389, 978-1685078386
