Bank owns a high percentage of assets in bonds

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Discuss what impact each of the following will have, in general, on EVE sensitivity to a change in interest rates. Consider two cases where rates rise sharply and fall sharply.

a. Bank owns a high percentage of assets in bonds that are callable anytime after three months.

b. Bank pays below market rates on TDs, and market interest rates move sharply higher.

c. A large percentage of the bank's assets are in 30 year fixed rate mortgages

Reference no: EM13884954

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