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

Download Full Solution

Comments

  • HWA
    Rasha

    this is a very good website

  • HWA
    maani

    I have 50 questions for the same test your page is showing only 28

  • HWA
    joeanne

    hi can you please help or guide me to answer my assignments. thanks

  • HWA
    joeanne

    hi can anyone help or guide me to my assignments. thanks

  • HWA
    Monik


  • HWA
    Cristina

    This solution is perfect ...thanks

  • HWA
    Janete

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA
    Sandeep

    Perfect bank of solution. 

  • HWA
    Oxana

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA
    Giuseppe

    works fine.