A ﬁnancial institution has equity equal to one-tenth of its assets.If its asset duration is currently equal to its liability duration, then to immunize, the ﬁrm needs to:
A)decrease the duration of its assets.
B)increase the duration of its assets.
C)decrease the duration of its liabilities.
D)do nothing, i.e., keep the duration of its liabilities equal to the duration of its assets.
E)None of the above.

Question

Quizplus · Accepted Answer

The Answer of A ﬁnancial institution has equity equal to one-tenth of its assets.If its asset duration is currently equal to its liability duration, then to immunize, the ﬁrm needs to:
A)decrease the duration of its assets.
B)increase the duration of its assets.
C)decrease the duration of its liabilities.
D)do nothing, i.e., keep the duration of its liabilities equal to the duration of its assets.
E)None of the above.

A ﬁNancial Institution Has Equity Equal to One-Tenth of Its