13. A bank has the following balance sheet: Assets Avg. Rate Rate sensitive $550,000 7.75% Fixed...

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13. A bank has the following balance sheet: Assets Avg. Rate Rate sensitive $550,000 7.75% Fixed rate Nonearning 755.000 8.75 Total 265,000 $1,570.000 Liabilities/Equity Avg. Rate Rate sensitive $575,000 6.25% Fixed rate Nonpaying Total. 605,000 390,000 $1,570,000 7.50 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 expense, 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. 13. A bank has the following balance sheet: Assets Avg. Rate Rate sensitive $550,000 7.75% Fixed rate Nonearning 755.000 8.75 Total 265,000 $1,570.000 Liabilities/Equity Avg. Rate Rate sensitive $575,000 6.25% Fixed rate Nonpaying Total. 605,000 390,000 $1,570,000 7.50 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 expense, 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.