If the Duration Gap Is Zero, How Will a Small

question 557

Multiple Choice

If the duration gap is zero, how will a small parallel shift in interest rates affect the market value of the bank's equity?

• A) If interest rates rise, the market value of equity will increase
• B) If interest rates rise, the market value of equity will decrease
• C) The bank is immunised from changes in interest rates.
• D) The market value of equity will decrease due to an increase in interest rates

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Definitions:

Precise Rules

Clearly defined and strict guidelines or regulations that must be followed to ensure a certain outcome or maintain order.

ADR

Alternative Dispute Resolution, a range of processes and techniques to resolve disputes outside the judiciary process, including mediation and arbitration.

Employee

An individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties.

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A competitive viewpoint where one party's gain is seen as another's loss, often leading to conflict and adversarial relationships.