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Scenario 1: (5 pts.) Suppose you decide to insulate the bank by attracting and issuing Variable rate CDs with a duration of 0.75 years
Scenario 1: (5 pts.) Suppose you decide to insulate the bank by attracting and issuing Variable rate CDs with a duration of 0.75 years and investing those funds in 10 year T-notes with a duration of 8.75 years. a. What is the dollar amount of CD's/T-notes that you must issue/buy to bring ISGAP = 0? b. Now, what is your DGAP of capital?
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