Assume that a goal of the regulatory agencies of financial institutions is to immunize the ratio of

Question:

Assume that a goal of the regulatory agencies of financial institutions is to immunize the ratio of equity to total assets, that is, ( (E/A) = 0. Explain how this goal changes the desired duration gap for the institution. Why does this differ from the duration gap necessary to immunize the total equity? How would your answers to part (h) in problem 23 and part (g) in problem 25 change if immunizing equity to total assets was the goal?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Institutions Management A Risk Management Approach

ISBN: 978-0071051590

8th edition

Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders

Question Posted: