Which of the Following Statements About Leverage-Adjusted Duration Gap Is

question 99

Multiple Choice

Which of the following statements about leverage-adjusted duration gap is true?

• A)It is equal to the duration of the assets minus the duration of the liabilities.
• B)Larger the gap in absolute terms, the more exposed the FI is to interest rate shocks.
• C)It reflects the degree of maturity mismatch in an FI's balance sheet.
• D)It indicates the dollar size of the potential net worth.
• E)Its value is equal to duration divided by (1 + R).

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Definitions:

Superior Orbital Fissure

A crack or slit in the skull located between the sphenoid wing and greater wing, allowing for the passage of several cranial nerves.

Jugular Foramen

An opening in the skull that allows passage for the internal jugular vein and several cranial nerves.

Foramen Ovale

The foramen ovale is an opening in the heart's septum present in the fetus that usually closes shortly after birth.

Chemoreceptors

Sensory receptor cells that respond to chemical stimuli from the environment or the bloodstream.