Why does bullet immunization work? Because although a rise in interest rate reduces market value of the portfolio interest income on reinvested cash flows increases by an offsetting amount 3) Because although a rise in interest rates increases a bank's interest rate risk exposure, its net interest income rises by an offsetting amount 4) None of the above Calculate the duration of the bank's liabilities: D(L) 1) 4 467 3) 2.467 4) 1.467