The Leverage Adjusted Duration Gap Measures

question 11

Multiple Choice

The leverage adjusted duration gap measures:

• A)the change in an FI's net worth if interest rates change
• B)the degree of duration mismatch in an FI's profit and loss statement
• C)the degree of duration mismatch in an FI's balance sheet
• D)All of the listed options are correct.

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Definitions:

Resources Fixed

A situation in an economic model where the availability of resources is constant and unchanging over time.

Output Variable

A variable that represents the result or outcome of a process or model.

Production Capacity

The maximum output that a company or economy can produce under normal conditions within a given period, often influenced by available resources and technology.

Diminishing Returns

A principle indicating that as more of a variable input is added to a fixed input, the added output from each additional unit of input will eventually decrease.