What is the bank''s duration gap in years

Assignment Help Macroeconomics

Reference no: EM13174865

A bank has DA= 2.4 years and DL= 0.9 years. The bank has total equity of $82 million and total assets of $850 million. Interest rates are at 6%.

a.What is the bank's duration gap in years?
b. If interest rates increase 100 basis points then what will be the predicted dollar change in equity value?

Reference no: EM13174865

Questions Cloud

Compute the energy emitted by an electron : Calculate the energy emitted by an electron when it drops from energy level 4 down

Letter of transmittal : You are president of the Friends of the Library, a nonprofit group that raises funds and provides volunteers to support your local library. Every February, you send a report of the previous year's activities and accomplishments to the County Arts Cou..

Derive the change in market value of equity as a function : Show how one can derive the change in market value of equity as a function of adjusted duration gap, asset size and interest rate shock.

Propose a structure for the original compound : A turn-of-the-century chemist isolated an aromatic compound of molecular formula C6H4Br2. He carefully nitrated this compound and purified three isomers of formula C6H3Br2NO2, one of which was obtained in very small amounts. Propose a structure fo..

What is the bank''s duration gap in years : What is the bank's duration gap in years? If interest rates increase 100 basis points then what will be the predicted dollar change in equity value?

Account of the meaning of human existence : In what different ways do the existentialist philosophers Kierkegaard and Sartre use the notions of love and sexual relations (sexual desire) to provide an account of the meaning of human existence?

How the aggregate demand multiplier influence a recession : What is the most likely component of aggregate demand to start a recession? How does the aggregate demand multiplier influence a recession?

Prepare a schedule of lease receipts for cherry ltd : Prepare a schedule of lease receipts for Cherry Ltd and the journal entries for the year ended 30 June 2011 and prepare a schedule of lease payments for Hazel Ltd and the journal entries for the year ended 30 June 2011.

Calculate the molecular mass of the nonionic solutes : calculate the molecular mass of the nonionic solutes. 8.02 grams of solute in 8.61 grams of water lower the freezing point to -0.430 degress celcius.

User Account

All Pages