Small Town Bank has total assets with a market value of $14.23 million and a duration of 2.64 years.The bank's liabilities equal $12.87 million and its equity is $1.36 million on a market value basis.To hedge interest rate risk,what duration should the bank seek for its liabilities?
A)2.86 years
B)2.78 years
C)2.39 years
D)2.48 years
E)2.92 years

Question

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The Answer of Small Town Bank has total assets with a market value of $14.23 million and a duration of 2.64 years.The bank's liabilities equal $12.87 million and its equity is $1.36 million on a market value basis.To hedge interest rate risk,what duration should the bank seek for its liabilities?
A)2.86 years
B)2.78 years
C)2.39 years
D)2.48 years
E)2.92 years

Small Town Bank Has Total Assets with a Market Value