1.Which of the following banks would likely have the highest return on equity?

Bank C: with low return on assets and low capital ratio

Bank A: with high return on assets and low capital ratio

Bank D: with low return on assets and high capital ratio

Bank B: with high return on assets and high capital ratio

2.Silverthorne State Bank's balance sheet lists the following assets and liabilities & capital including their corresponding balances:

Assets: required reserves $50; commercial loans-floating rate $200; commercial loans-fixed rate $300; consumer loans $150; mortgages-floating rate $400; mortgages-fixed rate $225; and corporate bonds-AAA rated $75.

Liabilities & capital: demand deposits $145; NOW accounts $150; MMDAs $250; CDs (short-term) $500; federal funds purchased $25; and capital $330.

Silverthorne wants to assess its interest rate risk. What is the bank's gap?

-$775

-$325

-$1,400

-$425