Small Town Bank Has Total Assets with a Market Value

question 11

Multiple Choice

Small Town Bank has total assets with a market value of $14.23 million and a duration of 2.64 years.The bank's liabilities equal $12.87 million and its equity is $1.36 million on a market value basis.To hedge interest rate risk,what duration should the bank seek for its liabilities?

• A)2.86 years
• B)2.78 years
• C)2.39 years
• D)2.48 years
• E)2.92 years

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Definitions:

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Organelles found in the cells of plants and other photosynthetic organisms, sites where photosynthesis takes place.

Carbon-14 Dating

A method for determining the age of an object containing organic material by measuring the levels of carbon-14, a radioactive isotope.

Neanderthals

An extinct species or subspecies of archaic humans who lived in Eurasia until about 40,000 years ago, closely related to modern humans.

Coexisted

Refers to the occurrence of two or more species, populations, or entities living together in the same environment at the same period in time.