A Financial Institution Has Equity Equal to One-Tenth of Its

question 8

Multiple Choice

A financial institution has equity equal to one-tenth of its assets. If its asset duration is currently equal to its liability duration,then to immunize,the firm needs to:

• A) decrease the duration of its assets.
• B) increase the duration of its assets.
• C) decrease the duration of its liabilities.
• D) do nothing, i.e., keep the duration of its liabilities equal to the duration of its assets.

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Definitions:

Free Oxygen

Atomic or molecular oxygen not bound to any other elements, often referring to atmospheric oxygen that is available for respiration.

Chemical Building Block

Basic components used in chemistry to synthesize more complex molecules.

Carbon Dioxide

A transparent, scentless gas that results from the combustion of carbon and organic materials and through the process of breathing. It exists naturally in the atmosphere and is taken in by plants during the process of photosynthesis.

Lysosomes

Membrane-bound organelles containing digestive enzymes, involved in the breakdown of cellular waste material and foreign substances.