A Bank Has an Average Asset Duration of 1

question 57

Multiple Choice

A bank has an average asset duration of 1.15 years and an average liability duration of 2.70 years. This bank has $250 million in total assets and $225 million in total liabilities. This bank has:

• A) A negative duration gap of 1.55 years.
• B) A positive duration gap of 1.28 years.
• C) A negative duration gap of 3.85 years.
• D) A negative duration gap of 1.28 years.

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Definitions:

Credit Cards

Means of access to preapproved lines of credit granted by a bank or finance company.

Debit Cards

Bank cards that allow users to make transactions by deducting money directly from their checking account.

Government Securities

Financial instruments issued by a government to finance its public projects, which include bonds, treasury bills, and notes.