A bank has DA = 2.4 years and DL= 0.9 years. The bank has total equity of $82 million and total assets of $850 million. Interest rates are at 6 percent.
To get DE to equal zero to protect the equity value in the event of an interest rate change,the bank could
A) reduce DA to 1.21 years.
B) increase DL to 2.44 years.
C) increase DL to 3.10 years.
D) reduce DA to zero.
E) increase DL to 2.76 years.
Correct Answer:
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