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Solution Library
Calculate Leverage Adjusted Gap Between Assets and Liabilities And Loan Amortization
Question
1. An FI has financial assets of $800 and equity of $50. If the duration of assets is 1.21 years and the duration of all liabilities is 0.25 years, what is the leverage-adjusted duration gap?
a. 0.9000 years.
b. 0.9600 years.
c. 0.9756 years.
d. 0.8844 years.
e. Cannot be determined.
2. Calculate the duration of a two-year corporate loan paying 6 percent interest annually, selling at par. The $30,000,000 loan is 100 percent amortizing.
a. 2 years.
b. 1.89 years.
c. 1.94 years.
d. 1.49 years.
e. 1.73 years.
3. Calculate the modified duration of a two-year corporate loan paying 6 percent interest annually. The $40,000,000 loan is 100 percent amortizing, and the current yield is 9 percent annually.
a. 2 years.
b. 1.91 years.
c. 1.94 years.
d. 1.49 years.
e. 1.36 years.
Summary
These short questions belong to Finance. The 1st question is about leverage adjusted duration gap between assets and liabilities and 2nd and 3rd questions are about 100% loan amortization.
Total Word Count 99
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