1. A bank manager is worried because the income gap currently equals $35-$35 million and interest rates are expected to increase by 1.5%. Determine the amount of rate-sensitive assets if rate sensitive liabilities are $467$467 million. Calculate the change in bank income if interest rates increase by 1.5%.

2.Determine the income gap of an institution with the following assets: reserves ($6 million), short term securities ($8 million), commercial loans maturing in less than 1 year ($20 million), commercial loans maturing in more than 5 years ($30 million); and the following liabilities: federal funds ($9 million), short term borrowings ($10 million), long term borrowings ($7 million) and CDs maturing in more than 2 years ($4 million).