If the market value of a bank's total assets is $1,000 million and total liabilities is $500
Fantastic news! We've Found the answer you've been seeking!
Question:
If the market value of a bank's total assets is $1,000 million and total liabilities is $500 million. The average asset duration of the bank is 5 years and its average liability duration is 3 years. Currently, market interest rates are 8 percent. If interest rates increase by 2 percent.
Calculate this bank's change in net worth.
Net worth will decrease by $55.5 million.
Net worth will increase by $55.5 million.
Net worth will decrease by $64.81 million.
Net worth will increase by $64.81 million.
Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
Posted Date: