Given NVB’s positive duration gap , what happens to the economic value of equity when interest rates increase sharply? ]]

Question

Given NVB’s  positive duration gap , what happens to the  economic value of equity  when interest rates increase sharply?  ]]>

Accepted Answer

Asset values decline more than liability values.

Answer

Equity increases because funding costs rise.

Answer

Assets and liabilities decline equally.

Answer

Liability values decline more than asset values.

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