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when banker expects a rise in interest rates in the fututre then the best strategy for the present is
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when banker expects a rise in interest rates in the fututre then the best strategy for the present is

User Legrandviking
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1 Answer

4 votes

Answer:

Increase duration of the bank assets

Step-by-step explanation:

Because When the duration of assets is longer than the duration of liabilities, this allows for a the duration gap is positive. And so even if interest rates rise, assets will lose more value than liabilities, hence reducing the value of the firm's equity.

User Ante
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