9-38 Immunization of an FIs net worth requires the duration of the liabilities to be adjusted for the amount of leverage on the balance sheet.

Question

Quizplus · Accepted Answer

Immunization of an FIs net worth takes into account the duration of liabilities and the amount of leverage on the balance sheet. This is because changes in interest rates can have a significant effect on the value of a financial institution's liabilities and assets, and an effective immunization strategy needs to consider both.

9-38 Immunization of an FIs Net Worth Requires the Duration