Which of the Following Statements About Leverage Adjusted Duration Gap

question 56

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)The 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 and its value is equal to duration divided by (1+R).

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Definitions:

Factor-Comparison Method

A job evaluation technique that involves comparing jobs to each other based on factors such as skill and responsibility to determine their relative worth.

Point System

A method of performance evaluation or employee recognition where individuals earn points for various achievements, which can be exchanged for rewards.

Job-Evaluation Technique

A systematic process for determining the relative worth of a job in comparison to other jobs within an organization, usually considering factors like skill, effort, and responsibility.

Compensable Factors

Characteristics of jobs that are valued by the employer and are compensated for in the form of wages, salaries, or benefits.