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Table 23.1 First National Bank

question 54

Multiple Choice

Table 23.1
First National Bank
Table 23.1 First National Bank -Refer to Table 23.1.Assuming that the average duration of its assets is five years,while the average duration of its liabilities is three years,a rise in interest rates from 5% to 10% will cause the net worth of First National to ________ by ________ of the total original asset value. A) increase; 11% B) decline; 11% C) increase; 10% D) decline; 5%
-Refer to Table 23.1.Assuming that the average duration of its assets is five years,while the average duration of its liabilities is three years,a rise in interest rates from 5% to 10% will cause the net worth of First National to ________ by ________ of the total original asset value.

Definitions:

Equally-Weighted

An investment strategy where each asset in a portfolio is given the same weight or importance.

Returns

The money made or lost on an investment, usually expressed as a percentage of the investment's initial cost.

Period

A specific span of time during which certain financial or economic activities are measured or observed.

Time Weighted

Time-weighted is an investment return calculation method that eliminates the effects of cash flows in and out of the portfolio, focusing on the investment manager's performance over time.