Assuming that the average duration of its assets is five years, while
Assuming that the average duration of its assets is five years, while the average duration of its liabilities is three years, then a 5 percentage point increase in interest rates will cause the net worth of First National to decline by ________ of
the total original asset value. A) 5 percent
B) 10 percent
C) 15 percent
D) 25 percent
ANSWER
B
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