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Suppose that your bank owns two assets, $ 7 5 0 in a consumer loan with a 2 . 2 year duration, and $ 5
Suppose that your bank owns two assets, $ in a consumer loan with a year duration, and $ in a municipal bond with a year duration. Which of the following funding schedules would most closely immunize the bank's balance sheet? Support your answer schedule A B or C with the duration gaps for each plan.
tableAmount,Duration in YearsSchedule A$Small time deposit,Large CDEquitySchedule B$Small time deposit,Zero Coupon CDLarge CDEquitySchedule C$Small time deposit,Zero Coupon CDLarge CDEquity
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