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The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB) $34 U.S. Treasury
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Answer #1

Duration Gap measures the difference between the weighted average assets duration and weighted average liabilities duration; where

Duration Gap = Average Duration of assets - Average duration of liabilities

Where,

Average Duration of assets = 3 years

Average duration of liabilities = 2 years

Therefore,

Duration Gap = 3 years – 2 years = 1 year

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