If a decline in interest rates causes the market value of a bank's net worth to rise,then the bank must have a ________.

Question

Quizplus · Accepted Answer

A positive duration gap means a bank's assets have a longer duration than its liabilities. This means that when interest rates decline, the value of the assets increases by a greater percentage than the value of the liabilities, resulting in an increase in the market value of net worth. Therefore, a positive duration gap is the most likely reason for a bank's net worth to rise with a decline in interest rates.

If a Decline in Interest Rates Causes the Market Value