A bank has the following balance sheet: Assets Avg. Rate Liabilities/Equity Rate sensitive $ 550,000 7.75% Rate sensitive $ 575,000 Avg. Rate 6.25% Fixed rate Nonearning 755,000 265,000 8.75 Fixed rate Nonpaying 605,000 390,000 7.50 Total $1,570,000 Total $1,570,000 Suppose interest rates fall such that the average yield on rate-sensitive assets decreases by 15 basis points and the average yield on rate-sensitive liabilities decreases by 5 basis points.

a. Calculate the bank's CGAP and gap ratio.

b. Assuming the bank does not change the composition of its balance sheet, calculate the resulting change in the bank's interest income, interest ex- pense, and net interest income.

c. The bank's CGAP is negative and interest rates decreased, yet net interest income decreased. Explain how the CGAP and spread effects influenced this decrease in net interest income.