The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB):
Question:
The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB):
U.S. Treasury bills .......................................$20
Demand deposits .........................................40
Mortgage-backed securities .......................30
Loans from other banks ...............................5
C&I loans ......................................................50
Discount loans ...............................................5
NOW accounts ............................................40
Savings accounts ........................................10
Reserve deposits with Federal Reserve .....8
Cash items in the process of collection .....5
Municipal bonds ...........................................5
Bank building ................................................4
If RNB’s assets have an average duration of five years and its liabilities have an average duration of three years, what is RNB’s duration gap?
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Money, Banking, and the Financial System
ISBN: 978-0134524061
3rd edition
Authors: R. Glenn Hubbard, Anthony Patrick O'Brien