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

question 89

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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