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.0.8844 years.B.Cannot be determined.C.0.9000 years.D.0.9756 years.E.0.9600 years.

Which of the following statements is TRUE?A.Duration is the weighted-average time to maturity on the loan using the present values of the cash flows as weights.B.An FI can immunize its portfolio by matching the maturity of its asset with its liabilities. C.The smaller the leverage-adjusted duration gap, the more exposed the FI is to interest rate shocks. D.The larger the numerical value of duration, the more sensitive is the price of that asset or liability to changes or shocks in interest rates.E.Setting the duration of the assets higher than the duration of the liabilities will exactly immunize the net worth of an FI from interest rate shocks.

Which of the following is false regarding duration gap analysis?Question 1Answera.Duration gap accounts for bank leverage.b.Duration gap analysis indicates the potential change in a bank’s market value of equity.c.Duration gap accounts for the present value of cash flows associated with all liabilities.d.Duration gap analysis does not classify assets as rate-sensitive.e.Duration gap analysis indicates the potential change in a bank’s net interest income.

Which of the following statements is FALSE?A.The economic meaning of duration is the interest elasticity of a financial asset’s price. B.Duration of a zero coupon bond is equal to the bond's maturity. C.Duration increases with the maturity of a fixed-income asset at a decreasing rate. D.Duration considers the timing of all the cash flows of an asset by summing the product of the cash flows and the time of occurrence. E.For a given maturity fixed-income asset, duration decreases as the market yield increases.

In order to achieve a negative leverage adjusted duration gap (DA-kDL<0) , a financial institution with zero leverage adjusted duration gap  can decrease the duration of asset portfolio byGroup of answer choicesIssuing short term bonds, use the funds to buy long term assetsSelling long term bonds in the asset portfolio, replace them with short term bondsSelling short term bonds in the asset portfolio, replace them with long term bondsIssuing short term bonds, use the funds to buyback its long term bonds

Company has sales of Rs 500000, variable cost Rs 300000. Fixed cost Rs 100000 and long term loans Rs 400000 at 10% interest. Calculate financial leverage.Options :2.331.671.13.5