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MANAGING INTEREST RATE RISK: DURATION GAP AND MARKET VALUE OF EQUITY - page 38 / 39

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In expansionary stages rates rise until they reach a peak as the Federal Reserve tightens credit availability.

In contractionary stages rates fall until they reach a trough when the U.S. economy falls into recession.

Interest Rates and the Business Cycle The general level of interest rates and the shape of the yield curve appear to follow the U.S. business cycle.

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