For a commercial bank, when the average duration of assets exceeds the average duration of liabilities, the duration gap is
A)zero.
B)positive.
C)negative.
D)either b or c, depending on the maturities of the assets .

Question

Quizplus · Accepted Answer

When the average duration of assets exceeds the average duration of liabilities, the duration gap is positive. This indicates that the bank's assets are more sensitive to interest rate changes than its liabilities, potentially affecting the bank's net interest margin.

For a Commercial Bank, When the Average Duration of Assets