Reading 13 EOC Question seems to have a mistake, can someone confirm this? They confuse longer duration and shorter duration, the solution should say longer duration, correct?
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Yeah I see your point. Not sure if they meant to say that if they keep focusing on selling their “short-duration products” (i.e the 2 year fixed GIC product), combined with the investment strategy of buying longer-duration bonds will accelerate the mismatch…
I think the longer duration bonds are the assets and the short duration products are their liabilities (4 years). That is the duration mismatch.
Yeah, bazz, maybe that is what they meant. I wrote them about it, will let you know.