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Question
Immunizing the balance sheet to protect equity holders from the effects of interest rate risk occurs when
A. the maturity gap is zero.
B. the repricing gap is zero.
C. the duration gap is zero.
D. the effect of a change in the level of interest rates on the value of the assets of the FI is exactly offset by the effect of the same change in interest rates on the liabilities of the FI.
E. after-the-fact analysis demonstrates that immunization coincidentally occurred.
Answer
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