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7 of 10 (0 complete) The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RN
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Answer #1

We have following information -

RNB's assets have an average duration of 3 years

RNB's liabilities have an average duration of 2 years

Duration gap can be calculated in following manner -

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

= 3 years – 2 years = 1 year

Therefore RNB’s duration gap is 1 year

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