Bank debt has duration value

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Reference no: EM131849470

You are a bank manager. Your bank’s assets have a duration value of 10 while your bank’s Debt has a duration value of 3. Since your bank’s Equity is equal to Asset minus Debt (and currently the bank’s equity is positive), will the bank’s equity increase or decrease if suddenly all interest rates go up? Briefly explain or show proof of your answer.

Reference no: EM131849470

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