Put the following steps in duration gap analysis in the proper order.
I. Estimate the economic value of assets, liabilities and equity.
II. Forecast the change in the economic value of equity for various interest rates.
III. Forecast future interest rates.
IV. Estimate the duration of assets and liabilities.
A) III, I, IV, II
B) I, II, III, IV
C) III, IV, I, II
D) IV, I, II, III
E) II, IV, I, III

Question

Put the following steps in duration gap analysis in the proper order.
I.	Estimate the economic value of assets, liabilities and equity.
II.	Forecast the change in the economic value of equity for various interest rates.
III.	Forecast future interest rates.
IV.	Estimate the duration of assets and liabilities.
A) III, I, IV, II
B) I, II, III, IV
C) III, IV, I, II
D) IV, I, II, III
E) II, IV, I, III

Quizplus · Accepted Answer

First, forecast future interest rates (III), then estimate the economic value of assets, liabilities, and equity (I), followed by estimating the duration of assets and liabilities (IV), and finally forecast the change in the economic value of equity for various interest rates (II).

Put the Following Steps in Duration Gap Analysis in the Proper