For a Bank That Has a Positive Duration Gap, an Increase

question 22

Multiple Choice

For a bank that has a positive duration gap, an increase in interest rates will cause a(n) _______ in the economic value of assets, that is _______ than the _________ in the economic value of liabilities, and a(n) _______ in the economic value of equity.

• A) increase, greater, decrease, increase
• B) increase, less, increase, decrease
• C) increase, greater, increase, increase
• D) decrease, less, decrease, increase
• E) decrease, greater, decrease, decrease

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Definitions:

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