We have N times about the duration of leveraged portfolio. Is LADG(leverage-adjusted duration gap) equal to the duration of Banks’ equity? Why? The two formulas look different. Wait for answer…thanks.

I always intepreted them as the same… if there is a positive LADG, that means your equity that is exposed to interest rates…aka if it goes up you lose value.

LADG = Aset duration - (debt weighting*debt duration) I think it does = the equity duration. Reason being LADG*equity value*basis point yield curve shift = CHANGE in value of equity. ?

Look diff formula to solve fi quiz in another thread.

[Asset duration - (debt weighting*debt duration)] x Asset / Equity = the formula from the other thread