Canes National Bank has $1,333 in assets and $700 in liabilities (i.e., deposits). The duration of...
Canes National Bank has $1,333 in assets and $700 in liabilities (i.e., deposits). The duration of the bank's assets is 4.2 years and the duration of the bank's liabilities is 2.7 years. What is the duration of the equity of Canes bank? Give the answer in years, with two decimals.
Homework Answers
Duration of Equity = [(Duration o0f Assets * Assets) - (Duration of Liability * Liability)] / Equity
= [(4.2 * $1,333) - (2.7 * $700)] / [$1,333 - $700]
= [$5,598.60 - $1,890] / $633
= $3,708.60 / $633 = 5.86 years
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