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:

Low Concentration

A condition characterized by a reduced amount of a substance in a given area or volume.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Potassium

An essential dietary mineral and electrolyte involved in nerve function, muscle contraction, and maintaining fluid and electrolyte balance in the body.

Sodium

A chemical element, symbol Na, essential for various bodily functions, including maintaining fluid balance and conducting nerve impulses.