A Bank Has an Average Asset Duration of 5 Years

question 115

Multiple Choice

A bank has an average asset duration of 5 years and an average liability duration of 3 years.This bank has total assets of $500 million and total liabilities of $250 million.Currently,market interest rates are 10 percent.What will be this bank's leverage-adjusted duration gap?

• A)2 years
• B)-2 years
• C)3.5 years
• D)-3.5 years
• E)None of the options is correct.

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Definitions:

Lipids

A broad group of naturally occurring molecules that include fats, waxes, sterols, fat-soluble vitamins (such as vitamins A, D, E, and K), monoglycerides, diglycerides, triglycerides, and phospholipids.

Hemophilia

A rare genetic disorder in which the blood's ability to clot is severely reduced, causing the patient to bleed severely from even a slight injury.

Punnett Square

A graphical representation used to predict the outcomes of a genetic cross by arranging the possible combinations of alleles from each parent.

Heterozygous

Describing an organism that has two different alleles for a given gene, one inherited from each parent, resulting in genetic variation.