Q on Leverage and Duration

so we all know this:

De*Equity = Da* Assets - Dl * Labilities

Does the “Assets” amount include borrowed funds or not? I was under the impression that they don’t but an old an exam I took said it does, so I’m a bit confused.

It does.

If you borrow money your assets increase and your liabilities increase. Obverse, reverse.

Under the CFAI Mock exam Q #37 on V1, the equation does NOT add the liabilities to the asset amount. Help!!!

Oh OR is it that the $100m of borrowed funds is already included in the $200m asset amount? If that’s the case, then the rule is consistent.

You don’t add it in the question.

The question says 200 assets and 100 liabilities.

S2000 was just saying that if you went and borrowed another 100 in liabilities, you would now have 300 assets and 200 liabilities. This reflects oyur orignial position of 100 in equity, becuase borrowing will not change your equity.

You are confusing assets with equity in this question.