A Bank with a Duration Gap of 1 Is More

question 15

True/False

A bank with a duration gap of 1 is more sensitive to changes in the economic value of equity than a bank with a duration gap of -1.5.

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Definitions:

Revenue

The collective revenue from transactions involving a company's core products or services, encompassing its central business operations.

Serial Bonds

Bonds issued under a single indenture at the same time, but which mature at different intervals, distributing the repayment over several years.

Early Bond Redemption

A financial process in which a bond issuer repays the principal amount of the bond before its maturity date, often resulting in penalties or fees.

Bond Redemption

The process of paying back the principal amount of a bond to the bondholders at or before maturity.