Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics)
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Chapter 9, Problem 5LO
To determine

Interest rate risk using Gap and Duration analysis.

Concept Introduction:

Gap Analysis: It is a technique to measure sensitivity of bank’s profit due to changes in interest rates.

Duration Analysis: It measures the sensitivity of the market value of bank’s total assets and liabilities to change in interest rates.

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