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Question 3 (10 marks) Suppose that you are the manager of a bank whose $350 billion of assets have an average duration of six years

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Question 3 (10 marks) Suppose that you are the manager of a bank whose $350 billion of assets have an average duration of six years and whose $320 billion of liabilities have an average duration of seven years. Conduct a duration analysis for the bank, and show what will happen to the net worth of the bank if interest rates rise by 4 percentage points. What actions could you take to reduce the bank's interest-rate risk

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