9-115 a Risk Manager Could Restructure Assets and Liabilities to Reduce

question 116

Multiple Choice

9-115 A risk manager could restructure assets and liabilities to reduce interest rate exposure for this example by

• A)increasing the average duration of its assets to 9.56 years.
• B)decreasing the average duration of its assets to 4.00 years.
• C)increasing the average duration of its liabilities to 6.78 years.
• D)increasing the average duration of its liabilities to 9.782 years.
• E)increasing the leverage ratio,k,to 1.

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Definitions:

Balance of Trade

The variation in worth between what a country buys from and sells to other countries during a specific time frame.

Electricity

A form of energy resulting from the existence of charged particles, widely used for lighting, heating, and powering machines and devices.

1920s

A decade characterized by economic prosperity and cultural flourishing in the United States, also known as the "Roaring Twenties."

Stock Market

A public marketplace where stocks, bonds, and other securities are bought and sold.