Douglas Bank has a balance sheet as below: Assets Reserves Securities Loans $5m $10m $60m Liabilities...
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Douglas Bank has a balance sheet as below: Assets Reserves Securities Loans $5m $10m $60m Liabilities and Equity $25m $40m $10m Chequable deposits Term deposits Equity capital The manager estimates the average duration of assets to be 3 years, and average duration of liabilities to be 2 years. Now market interest rate rises from 4% to 5%. What will be the change of this bank's net worth? Show your calculation. Douglas Bank has a balance sheet as below: Assets Reserves Securities Loans $5m $10m $60m Liabilities and Equity $25m $40m $10m Chequable deposits Term deposits Equity capital The manager estimates the average duration of assets to be 3 years, and average duration of liabilities to be 2 years. Now market interest rate rises from 4% to 5%. What will be the change of this bank's net worth? Show your calculation.
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The change in the net worth of the bank can be calculated using the following formula Change in net ... View the full answer
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