Assume a bank has $200 million of assets with a duration of 2.5, and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent, the net worth as a percentage of assets would by approximately. A) increase; 1.8% B) decrease; 1.8% C) increase; 1.4% D) decrease; 1.4%

Assume a bank has $200 million of assets with a duration of 2.5, and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent, the net worth as a percentage of assets would by approximately. A) increase; 1.8% B) decrease; 1.8% C) increase; 1.4% D) decrease; 1.4%

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 39P: How much money do you have to put into a bank account that pays 10% interest compounded annually to...

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