-Calculate the Leverage-Adjusted Duration Gap to Four Decimal Places and State

question 9

Multiple Choice

-Calculate the leverage-adjusted duration gap to four decimal places and state the FI's interest rate risk exposure of this institution.

• A)+1.0308 years;exposed to interest rate increases.
• B)-0.3232 years;exposed to interest rate increases.
• C)+0.8666 years;exposed to interest rate increases.
• D)+0.4875 years;exposed to interest rate increases.

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Definitions:

Variance

A statistical measure that represents the degree of spread or dispersion of a set of data points, or the difference between expected and actual performance.

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Regulation

Regulation involves the establishment and enforcement of rules or laws by government or regulatory bodies to govern the behavior of companies, industries, or markets, often for the purpose of protecting public interest.

Fulltime Employees

Individuals who are contracted to work the full number of hours defined as full-time by their employer, typically experiencing benefits not offered to part-time employees.