1.A bank has an average asset duration of 1.15 years and an average liability duration of 2.70 years.This bank has $250 million in total assets and $225 million in total liabilities.This bank has

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A)A negative duration gap of 1.55 years

B)A positive duration gap of 1.28 years

C)A negative duration gap of 3.85 years

D)A negative duration gap of 1.28 years

2.A bond has a duration of 7.5 years.Its current market price is $1,125.Interest rates in the market are 7% today.It has been forecasted that interest rates will rise to 9% over the next couple of weeks.How will this bond price change in percentage terms?

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A)Its price will fall by 14.02%

B)Its price will rise by 14.02%

C)Its price will fall by 2%

D)Its price will rise by 2%

3.A bank has an average asset duration of 5 years and an average liability duration of 3 years.This bank has total assets of $500 million and total liabilities of $250 million.Currently, market interests are 10%.If interest rates fall to 8%, what is this bank's change in net worth?

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A)Net worth will decrease by $31.82 million

B)Net worth will increase by $31.82 million

C)Net worth will not change at all

D)Net worth will decrease by $15.91 million

4.Which of the following situation creates the most liquidity risk?

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A)Long-term assets funded by short-term liabilities

B)Short-term assets funded by short-term liabilities

C)Long-term assets funded by long-term liabilities

D)Short-term assets funded by long-term liabilities