How should the bank manager adjust the bank maturity gap

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Reference no: EM132920011

Problem 1: The obvious benefit to holding a diversified portfolio of loans is to spread risk exposures so that a single event does not result in a great loss to the bank. Are there any benefits to not being diversified?

Problem 2: If a bank manager is certain that interest rates were going to increase within the next six months, how should the bank manager adjust the bank's maturity gap to take advantage of this anticipated increase? What if the manager believes rates will fall? Would your suggested adjustments be difficult or easy to achieve?

Reference no: EM132920011

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