1. You calculate that the duration of your assets of your bank is 5.6 years and the duration of your liabilities is 4.2 years. You currently have $70 million in liabilities and $5 million in equity. The interest rate is currently 4%. Calculate the change in net worth if interest rates decrease by 20 basis points.
242,703.69
-242,307.69
2,423,076.92
-2,423,076.92
None of the above
2. You are considering opening a money market account, but have multiple interest earning options available to you. All other things being equal, which compounding method should you choose if you wish to maximize your earnings?
A. Annually
C. Monthly
B. Quarterly
D. Daily