Which of the following is false regarding duration gap analysis?
A) Duration gap analysis does not classify assets as rate-sensitive.
B) Duration gap analysis indicates the potential change in a bank's net interest income.
C) Duration gap accounts for bank leverage.
D) Duration gap accounts for the present value of cash flows associated with all liabilities.
E) Duration gap analysis indicates the potential change in a bank's market value of equity.

Question

Quizplus · Accepted Answer

Duration gap analysis is primarily used to assess the potential change in a bank's market value of equity, not its net interest income.

Which of the Following Is False Regarding Duration Gap Analysis