Explain duration GAP analysis in banks. Calculate the duration Gap of the following excerpts from the...
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Explain duration GAP analysis in banks. Calculate the duration Gap of the following excerpts from the balance sheet of a bank. Also calculate the impact on the equity of the bank in the different interest rates scenarios. Balance Sheet for Hypothetical Bank Particulars Assets Duration Liabilities Duration Current Current Assets 1000 7 years Liabilities 700 5 Years Fixed Assets 300 Other Liab. 300 1300 Equity 300 1300 Scenarios for Impact analysis: 1. Interest rates increased by 1% 2. Interest rates decreased by 1% Explain duration GAP analysis in banks. Calculate the duration Gap of the following excerpts from the balance sheet of a bank. Also calculate the impact on the equity of the bank in the different interest rates scenarios. Balance Sheet for Hypothetical Bank Particulars Assets Duration Liabilities Duration Current Current Assets 1000 7 years Liabilities 700 5 Years Fixed Assets 300 Other Liab. 300 1300 Equity 300 1300 Scenarios for Impact analysis: 1. Interest rates increased by 1% 2. Interest rates decreased by 1%
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