The Average Duration of the Loans Is 10 Years What Is the Leveraged-Adjusted Duration Gap of the Bank's Portfolio

question 6

Multiple Choice

The average duration of the loans is 10 years.The average duration of the deposits is 3 years. $$\begin{array} { | l | r | l | r | } \hline \text { Consumer loans } & \$ 50 \text { million } & \text { Deposits } & \$ 235 \text { million } \\\hline \text { Commercial Loans } & \$ 200 \text { million } & \text { Equity } & \$ 15 \text { million } \\\hline \text { Total Assets } & \$ 250 \text { million } & \text { Total Liabilities \& Equity } & \$ 250 \text { million } \\\hline\end{array}$$ What is the leveraged-adjusted duration gap of the bank's portfolio?

• A)10 years.
• B)7.3 years.
• C)7 years.
• D)7.18 years.
• E)3 years.

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Definitions:

Id

In Freudian psychoanalytic theory, the part of the human psyche that is the source of instinctual impulses and demands for immediate satisfaction of basic needs.

Free Association

A psychoanalytic therapy technique where patients are encouraged to voice thoughts without censorship as they occur.

Hypnosis

State of consciousness in which the person is especially susceptible to suggestion.

Psychoanalytic Method

The psychoanalytic method is a therapeutic approach developed by Sigmund Freud, focusing on exploring unconscious conflicts and motivations through techniques such as free association and dream analysis.