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Assume That the Value of Liabilities Equals That of Earning

question 47

Multiple Choice

Assume that the value of liabilities equals that of earning assets. If asset portfolio durations are ____ than liability portfolio durations, then the market value of assets are ____ interest-rate sensitive than the market value of liabilities.


Definitions:

Monthly Interest Rate

The percentage of interest that is charged or earned on an investment or loan on a monthly basis.

Default Rate

The rate at which borrowers fail to make required payments on their loans or credit obligations.

Monthly Interest Rate

The percentage of interest calculated on a monthly basis typically used in loans and financial products.

EOQ

Economic Order Quantity, an inventory management technique that determines the ideal order size to minimize total inventory costs including holding and ordering costs.

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