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Given the maturity gap calculation found above, if UFB expects interest rates to decrease , should it consider hedging its interest rate risk? Why or
Given the maturity gap calculation found above, if UFB expects interest rates to decrease, should it consider hedging its interest rate risk? Why or why not?
(I am stuck on this question.The maturity gap that I found in the previuos question was negative $320. The exhibit in my book says that when the bank's gap is negative and they expect interest rates to decrease the bank should Remain Unhedged. My question is: Why should the bank remain Unhedged? Thanks)
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