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Duration is a measure of price sensitivity to changes in interest rates, where the greater the duration of the asset (or liability), the more price
Duration is a measure of price sensitivity to changes in interest rates, where the greater the duration of the asset (or liability), the more price sensitive that asset (or liability) is. A positive Duration GAP (DGAP) suggests the duration of assets is greater than the duration of liabilities (DA>DL). Is the following statement True or False? When DGAP is positive, the economic value of equity (EVE) decreases as rates increase because the decrease in the value of the assets is proportionally more than the decrease in the value of the liabilities, causing the value of equity to fall. True False Duration is a measure of price sensitivity to changes in interest rates, where the greater the duration of the asset (or liability), the more price sensitive that asset (or liability) is. A positive Duration GAP (DGAP) suggests the duration of assets is greater than the duration of liabilities (DA>DL). Is the following statement True or False? When DGAP is positive, the economic value of equity (EVE) decreases as rates increase because the decrease in the value of the assets is proportionally more than the decrease in the value of the liabilities, causing the value of equity to fall. True False
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