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what is the answer to this ? a) What is Interest Rate...

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Finance

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a) What is Interest Rate Risk? Mention and explain the yapious sources of interest rate risk Question 3 (Groups 7 \& 8) in a typical banking book. b) XYZ Bank has the following balance sheet extract as at 31A March 2020: The duration of the assets is 7 years and uas of the customer deposits is 5 years. The bank expects interest rate to rise by 100bps in the next 1 year and are worried about the impact on their capital. The current interest rate for the 1 year tenor is 17%. i) Calculate the impaet of the rate increase on the bank's capital ii) Prepare the bank's new balance sheet assuming the market rate rises as predicted

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