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1. Nearby Bank has the following balance sheet (in millions): Assets Liabilities and Equity Cash $325 Demand deposits $200 5-year Treasury notes 125 12-year certificates

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1. Nearby Bank has the following balance sheet (in millions): Assets Liabilities and Equity Cash $325 Demand deposits $200 5-year Treasury notes 125 12-year certificates of deposit 200 30-year mortgages 50 Equity 100 Total assets $500 Total liabilities and equity $500 What is the maturity gap for Nearby Bank? Is Nearby Bank more exposed to an increase or decrease in interest rates? Explain why (i.e. is the bank short funded or long funded)

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