A bank has the following balance sheet: Assets Rate sensitive $225,000 Avg. Rate 6.35% Liabilities/Equity Rate sensitive $300,000 Avg. Rate 4.25% Fixed rate 550,000 7.55 Nonearning Total 120,000 $895,000 Fixed rate Nonpaying Total 505,000 6.15 90,000 $895,000 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.

a. Calculate the bank's repricing GAP.

b. Assuming the bank does not change the composition of its balance sheet, calculate the net interest income for the bank before and after the interest rate changes. What is the resulting change in net interest income?

c. Explain how the CGAP and spread effects influenced this increase in net interest income.