-What is the leverage-adjusted duration gap?
A)0.605 years.
B)0.956 years.
C)0.360 years.
D)0.436 years.
E)0.189 years.

Question

-What is the leverage-adjusted duration gap?
A)0.605 years. 
B)0.956 years. 
C)0.360 years. 
D)0.436 years. 
E)0.189 years.

Quizplus · Accepted Answer

The leverage-adjusted duration gap is the difference between the duration of the assets and the duration of the liabilities, adjusted for the leverage ratio. The leverage ratio is the ratio of debt to equity. In this case, the leverage ratio is 50%, so the leverage-adjusted duration gap is 0.605 years.

-What Is the Leverage-Adjusted Duration Gap