Question: Watson Thrift Association reports an average asset duration of 5 years and an average liability duration of 4.25 years. In its latest financial report, the association recorded total assets of $1.8 billion and total liabilities of $1.5 billion. If interest rates began at 7 percent and then suddenly climbed to 9 percent, what change will occur in the value of Watson's net worth? By how much would Watson's net worth change if, instead of rising, interest rates fell from 7 percent to 5 percent?