Consider the following.

a. Calculate the leverage-adjusted duration gap of an FI that has assets of $1.7 million invested in 25-year, 10 percent semiannual coupon Treasury bonds selling at par and whose duration has been estimated at 10.01 years. It has liabilities of $970,000 financed through a two-year, 9.00 percent semiannual coupon note selling at par.

b. What is the impact on equity values if all interest rates fall 25 basis pointsthat is, R/(1 + R/2) = 0.0025? (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

a. Leveraged adjusted duration gap ___________

b. Change in Net worth using Leveraged adjusted duration gap _________