Consider an Asset with a Current Market Value of $250

question 53

Multiple Choice

Consider an asset with a current market value of $250 000 and a duration of 3.3 years.Assume the asset is partially funded through zero-coupon bonds which currently sells for $225 000 and has a maturity of 4 years.The current discount rate is 15%.Calculate the duration gap for this scenario:

• A)-0.3 years
• B)0.3 years
• C)-0.7 years
• D)0.7 years

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Definitions:

Salable Item

A product or good that can be sold in the market.

Revenue Received

The actual income that a company or organization receives during a specific period, typically from sales of goods or services.

Operational Performance

Evaluation of an organization's effectiveness in producing its goods or services, considering efficiency and productivity.

EBIT

EBIT, an indicator of corporate earnings, captures the profit of a company by including all costs except for those related to interest and taxes.