Zestt

The answer is A.

Step 1: When a bank has short term liabilities, the duration of the these liabilities is small and also negative. Note that. Once you get that concept you are on your way.

Step 2: When the assets are long term, the duration is higher and also positive.

Step 3: Add the durations of the long term assets and the short term liabilities to get the real position of the equity/surplus. You will get a net positive duration.

Step 4: Determine the effect of interest rate on this net duration.