1. Calculate Harris Bank's historical average cost of funds for its liability side. (2 marks)

2. Calculate Harris Bank's marginal cost of funds if they would raise funds today using only the 6 month Certificate of Deposit. What are the implications of lending based on historical versus marginal cost of funds for Harris Bank in this case? (3 marks)

3. Harris Bank's Chief Economist is forecasting a substantial decrease in money market interest rates over the next 4 weeks. Assuming the Chief Economist is correct in her forecast, what would you recommend to Harris Bank's funds management department regarding how and where to raise the money needed? Explain why you make this recommendation. (5 marks)