A an Average Asset Duration of 4

question 102

Multiple Choice

A an average asset duration of 4.7 years and an average liability duration of 3.3 years.This bank has $750 million in total assets and $500 million in total liabilities.This bank's leverage-adjusted duration gap is a:

• A)positive gap of 8.0 years.
• B)negative gap of 2.5 years.
• C)positive gap of 1.4 years.
• D)positive gap of 2.5 years.
• E)None of the options is correct.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Net Investment

The total amount spent on acquiring, maintaining, and improving fixed assets, minus depreciation.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.