QUESTION 8AssetsLiabilitiesA = $100 mL = $90 mE = $10 m%3DAssume that the average duration of assets is 9 while the average duration of liabilities is 3 years. You are the liability manager of thebank and your boss is unhappy about the interest rate risk.How should you change the duration of the liability side to eliminate all interest rate risk? Provide your answer by calculating the newliability duration with two decimals.

Answered: Assets Liabilities A = $100 m L = $90 m…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 4.8P

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