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

question 3

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.
• E)None of the above.

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