Question: 2) If a bank has assets = $100 with average duration of 5 years and liabilities = $80 with average duration of 2 years; then

2) If a bank has assets = $100 with average duration of 5 years and liabilities = $80 with average duration of 2 years; then if interest rates in the economy all increase 2 percentage points: a) What is the percent change in the value of its assets? And what is the value of its assets after this change? b) What is the percent change in the value of its liabilities? And what is the value of its liabilities after this change? c) Before the increase in interest rates, what was this firm's Owners Equity = Net Worth = "Bank Capital" in $? d) After the increase in interest rates, what was this firms Owners Equity = Net Worth ="Bank Capital" in $

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