Which of the following situations could decrease the accuracy of using duration to predict an expected change in a bank's asset or liability value ?

a. when the difference in maturity of a banks asset and liabilities becomes larger.

b. when interest rate shocks become smaller.

c. when the difference in maturities of a banks assets and liabilities become smaller.

d. when interest rate shocks become larger.

which of the following statements regarding immunization is correct?

a. If a bank perfectly matches the maturities of the assets and liabilities, it should achieve perfect immunization for equityholders against interest rate risk

.

If banks need to satisfy regulatory requirements, they are required to match the durations of their assets with the leverage-adjusted durations of their liabilities.

O C.

If a bank immunizes a portfolio of its assets or liabilities against interest rate risk, the bank expects that the portfolio will neither gain nor lose its value when interest rates fluctuate.

O D. Banks can immunize their portalios by matohing the fraturites of their assets with their liabilities.