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A commercial bank takes in short-term deposits and the uses those funds to make longer term loans. As such, the duration of the bank’s assets tends to be longer than the duration of the bank’s liabilities. What will happen when interest rates rise? The bank’s: A. liabilities will decrease in value by more than the bank's assets causing the bank's equity (surplus) to increase. B. assets will increase in value by more than the bank's liabilities causing the bank's equity (surplus) to decrease. C. assets will decrease in value by more than the bank's liabilities causing the bank's equity (surplus) to decrease. |