1.A bank has the following balance sheet:

Suppose interest rates rise such that the average yield on rate-sensitive assets increases by 45 basis points and the average yield on rate-sensitive liabilities increases by 35 basis points.
Calculate the bank’s repricing GAP and gap ratio.
Assuming the bank does not change the composition of its balance sheet, calculate the resulting change in the bank’s interest income, interest expense and net interest income.
Explain how the CGAP and spread effects influenced the change in net interest income. LO 5.3, 5.4

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Assets $ Avg. rate % Liabilities and equity Rate-sensitive 550 000 7.75 Rate-sensitive 375 000 Avg. rate % 6.25 Fixed-rate 755 000 8.75 Fixed-rate 805 000 7.50 Non-earning 265 000 Non-paying 390 000 Total 1570 000 Total 1570 000