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MANAGING INTEREST RATE RISK: DURATION GAP AND MARKET VALUE OF EQUITY - page 36 / 39

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Speculating on DGAP

It is difficult to consistently alter either GAP or DGAP on the balance sheet and increase earnings or the market value of stockholders' equity.

Whenever management chooses to change asset and liability maturities and/or durations in anticipation of rate changes, it is placing a bet against forward rates from the yield curve.

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