A Bank Has an Average Asset Duration of 5 Years

question 116

Multiple Choice

A bank has an average asset duration of 5 years and an average liability duration of 9 years.This bank has total assets of $1,000 million and total liabilities of $850 million.Currently,market interest rates are 5 percent.If interest rates rise by 2 percent (to 7 percent) ,what is this bank's change in net worth?

• A)Net worth will decrease by $50.47 million.
• B)Net worth will increase by $50.47 million.
• C)Net worth will decrease by $240.95 million.
• D)Net worth will increase by $240.95 million.
• E)Net worth will not change at all.

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Definitions:

Delivery Schedules

Plans outlining when and how products or materials will be delivered to a specific location, often used in manufacturing and retail to ensure timely operations.

E-Commerce Strategies

Planned actions designed to promote and sell products or services through electronic channels, focusing on optimizing online presence and customer engagement.

Operational Planning

Detailed standards that guide implementation of tactical plans.

Strategic Planning

Process of determining the primary objectives of an organization and then acting and allocating resources to achieve those objectives.