Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I do not understand why 2.2 is not the correct answer. I am calaculating 130 as total assets, 117 as total liabilities and then plugging
I do not understand why 2.2 is not the correct answer. I am calaculating 130 as total assets, 117 as total liabilities and then plugging into the formula for duration gap so 4-2(117/130)=2.2. Not sure where my mistake is, please help!
The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB): $25 $50 $27 $6 $46 $10 U.S. Treasury bills Demand deposits Mortgage-backed securities Loans from other banks C&l loans Discount loans NOW accounts Savings accounts Reserve deposits with Federal Reserve Cash items in the process of collection Municipal bonds Bank building $39 $12 $10 $10 $4 If RNB's assets have an average duration of four years and its liabilities have an average duration of two years, what is RNB's duration gap? Duration gap = 2.2 The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB): $25 $50 $27 $6 $46 $10 U.S. Treasury bills Demand deposits Mortgage-backed securities Loans from other banks C&l loans Discount loans NOW accounts Savings accounts Reserve deposits with Federal Reserve Cash items in the process of collection Municipal bonds Bank building $39 $12 $10 $10 $4 If RNB's assets have an average duration of four years and its liabilities have an average duration of two years, what is RNB's duration gap? Duration gap = 2.2Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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