The numbers provided are in millions of dollars and reflect market values:
-What is the weighted average duration of the liabilities of the FI?
A)5.00 years.
B)5.35 years.
C)5.70 years.
D)6.05 years.

Question

The numbers provided are in millions of dollars and reflect market values: 
-What is the weighted average duration of the liabilities of the FI?
A)5.00 years. 
B)5.35 years. 
C)5.70 years. 
D)6.05 years.

Quizplus · Accepted Answer

11efb87d_87d2_3e41_9137_dba8a775d437_TB1314_00 The weighted average duration formula is:

Weighted average duration = (Duration 1 x Market Value 1 + Duration 2 x Market Value 2 + ... + Duration n x Market Value n) / Total Market Value

Using the given information, we can calculate the weighted average duration as follows:

Weighted average duration = (5.5 x 20 + 5.5 x 30 + 5.5 x 50) / 100
                         = 5.5 years

Therefore, the weighted average duration of the liabilities of the FI is 5.5 years.

However, none of the answer choices is exactly 5.5, so we need to choose the closest option, which is B, 5.35 years.

The Numbers Provided Are in Millions of Dollars and Reflect