When DGAP

Name: When DGAP < 0, DA is below DL. An interest rate fall will cause the asset to increase in value by less than the liability; that is, our net position will deteriorate.
Brand: Quizplus
Rating: 4.7 (49 reviews)

Question

When DGAP < 0, DA is below DL. An interest rate fall will cause the asset to increase in value by less than the liability; that is, our net position will deteriorate.

Quizplus · Accepted Answer

When DGAP (Duration Gap) is less than 0, it indicates that the duration of assets (DA) is less than the duration of liabilities (DL). In this scenario, a fall in interest rates will cause liabilities to increase in value more than assets, leading to a deterioration in the net position.

When DGAP < 0, DA Is Below DL