Question: Can someone explain the work behind how B is correct?? 8. A bank has an average asset duration of 5 years and an average liability

Can someone explain the work behind how B is correct??

8. A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to 8 percent), what is this bank's change in net worth?

A.	Net worth will decrease by $31.81 million.

B.	Net worth will increase by $31.81 million.

C.	Net worth will increase by $27.27 million.

D.	Net worth will decrease by $27.27 million.

E.	Net worth will not change at all.

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