A bank has an average duration of its liabilities equal to 2 years. The bank's average duration of its assets is 3.5 years. The bank's market value of equity is at risk if _______________________.

A bank has an average duration of its liabilities equal to 2 years. The bank's average duration of its assets is 3.5 years. The bank's market value of equity is at risk if _______________________. 



A. interest rates fall

B. credit spreads fall

C. interest rates rise

D. the price of all fixed-income securities rises



Answer: C


Finance

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