A bank has da25 years dl06 years and k89 assets are equal


A bank has DA=2.5 years, DL=0.6 years, and k=89%. Assets are equal to $1.5 million. According to the duration gap model, what size interest rate change would make the institution insolvent if rates are currently 6%?

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Finance Basics: A bank has da25 years dl06 years and k89 assets are equal
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