QUESTION 1

An FI has financial assets of $800 and equity of $75. If the duration of assets is 1.27 years and the duration of all liabilities is 0.63 years, what is the leverage-adjusted duration gap? To solve this problem, use duration values without converting to modified duration.

		0.8432 years.
		0.6632 years.
		0.6991 years.
		0.8844 years.
		Cannot be determined.