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:

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The process by which an innovation is communicated through certain channels over time among the members of a social system.

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