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QUESTION 6 You are assessing the interest rate risk of following balance sheet. Assets Liabilities A = $100 m L = $90 m E =
QUESTION 6 You are assessing the interest rate risk of following balance sheet. Assets Liabilities A = $100 m L = $90 m E = $10 m Assume that the average duration of assets is 5 years, while the average duration of liabilities is 3 years. What would happen to the banks' equity if, interest rates were decreasing from 10% to 9%? Calculate the change in millions of dollars, e.g. "1" for $1 million. For increases just write the number, for decreases add
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