Calculate the banks dgap if the alco targets

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Conduct DGAP analysis using the following information:

a. Calculate the bank's DGAP if the ALCO targets the economic value of stockholders' equity. Is this bank positioned to gain or lose if interest rates rise?

b. Estimate the change in economic value of equity if all market interest rates fall by an average of 1.5 percent. Compare the results to each balance sheet item adding up the total change in assets less the total change in liabilities to get the change in equity versus using to find the estimated change in EVE.

c. Provide a specific transaction that the bank could implement to immunize its interest rate risk. The transaction may be a new asset funded by a new liability or an asset sale and the simultaneous purchase of another asset.

Reference no: EM13884865

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