ACI
3I0-012 · Question #188
If the duration gap is zero, how will a small parallel shift in interest rates affect the market value of the bank's equity?
The correct answer is C. The market value of equity will decrease due to an increase in interest rates. See the full explanation below for the reasoning.
Question
If the duration gap is zero, how will a small parallel shift in interest rates affect the market value of the bank's equity?
Options
- AIf interest rates rise, the market value of equity will increase
- BIf interest rates rise, the market value of equity will decrease
- CThe market value of equity will decrease due to an increase in interest rates
How the community answered
(23 responses)- A4% (1)
- B13% (3)
- C83% (19)
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