A bank has mortgage loans with a current market value of 325 million euros. The...
50.1K
Verified Solution
Link Copied!
Question
Finance
A bank has mortgage loans with a current market value of 325 million euros. The duration of this mortgage loan portfolio is 15.9 years. This bank finances its mortgages by issuing CDs and the current value of these debts is 275 million euros. The duration of these commitments is 4.6 years.
a) What is the initial duration of equity of this bank? 2 points
b) Explain how this bank can hedge an interest rate risk by restructuring its balance sheet? 2 points
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.