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Use of Leverage (Continued) o Risk of a Leveraged Portfolio: Duration of Equity o Example: Consider that the initial value of the portfolio is $100

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Use of Leverage (Continued) o Risk of a Leveraged Portfolio: Duration of Equity o Example: Consider that the initial value of the portfolio is $100 million with a duration of 3. Then the manager borrows $300 million. Using a 50 basis- point change compute the duration of the equity unlevered) portfolio

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