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If RNB's assets have an average duration of three years and its liabilities have an average duration of two years, what is RNB's duration gap? Duration gap =

If RNB's assets have an average duration of three years and its liabilities have an average duration of two years, what is RNB's duration gap? Duration gap =

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Please give me correct answer and full explanation with calculation. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
K The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB): U.S. Treasury bills $15 Demand deposits Mortgage-backed securities Loans from other banks C&I loans Discount loans $44 $28 $6 $52 $7 NOW accounts $36 Savings accounts $14 Reserve deposits with Federal Reserve $9 $5 $10 $3 Cash items in the process of collection Municipal bonds Bank building If RNB's assets have an average duration of three years and its liabilities have an average duration of two years, what is RNB's duration gap? Duration gap:
Transcribed Image Text:K The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB): U.S. Treasury bills $15 Demand deposits Mortgage-backed securities Loans from other banks C&I loans Discount loans $44 $28 $6 $52 $7 NOW accounts $36 Savings accounts $14 Reserve deposits with Federal Reserve $9 $5 $10 $3 Cash items in the process of collection Municipal bonds Bank building If RNB's assets have an average duration of three years and its liabilities have an average duration of two years, what is RNB's duration gap? Duration gap:
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