For given changes in interest rates, the change in the market value of net worth of an FI is equal to the difference between the changes in the market value of the assets and market value of the liabilities.

Question

Quizplus · Accepted Answer

This statement is true according to the basic balance sheet equation where assets = liabilities + net worth. When interest rates change, the market values of assets and liabilities may change differently, resulting in a change in net worth.

For Given Changes in Interest Rates, the Change in the Market