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what is the answer to this? 2. Suppose that Cal Bank's balance...

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Finance

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2. Suppose that Cal Bank's balance sheet is Assume that the duration of asset is 5 years and that of the liabirty is 5 yrs. expects interest rate to rise by 1% from the current level of 10%. 1. Calculate the potential loss on the bank's net worth? ii. Prepare the bank's balance sheet after the rate change? iii. How can the bank hedge against interest rate risk? 3. Suppose Cal Bank has a GHS 2 million 5 -year asset on its balance sheet with durati on of 3 years and current price of GHS 440,000. The bank's research team has predict ed that the interest rate will rise by 2% from the current level of 13% over the next 3m onths. How can the bank use a forward contract to hedge an expected interest rate ris k on the balance sheet

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