The Following Information Is About Current Spot Rates for Second

Multiple Choice

The following information is about current spot rates for Second Duration Savings' assets (loans) and liabilities (CDs) . All interest rates are fixed and paid annually. If the FI finances a $500,000 2-year loan with a $400,000 1-year CD and equity, what is the leveraged adjusted duration gap of this position? Use your answer to the previous question.

A) +1.25 years
B) +1.12 years
C) -1.12 years
D) +0.92 years
E) -1.25 years