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

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Assume that a goal of the regulatory agencies of financial institutions is to immunize the ratio of equity to total assets, that is, Δ(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 24 and part (g) in problem 26 change if immunizing equity to total assets was the goal?

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