2. Consider an Fl that issues $200 million of liabilities with two years to maturity to finance the purchase of $200 million of assets with a one year maturity. Suppose that the cost of funds (liabilities) for the Fl is 5 percent per year and the return on the assets is 9 percent per year. a. Calculate the Fi's profit spread and dollar value of profit in year 1? (1 points) b. Calculate the profit spread and dollar value of profit in year 2, if the FI can reinvest its assets at 9 percent. (1.5 points) c. If interest rates fall and the Fl can invest in one-year assets at 6 percent in the second year, calculate the Fi's profit spread and dollar value of profit in year 2. (1.5 points) d. If interest rates rise and the FI can invest in one-year assets at 11 percent in the second year, calculate the FI's profit spread and dollar value of profit in year 2. (1.5 points) 2. Consider an Fl that issues $200 million of liabilities with two years to maturity to finance the purchase of $200 million of assets with a one year maturity. Suppose that the cost of funds (liabilities) for the Fl is 5 percent per year and the return on the assets is 9 percent per year. a. Calculate the Fi's profit spread and dollar value of profit in year 1? (1 points) b. Calculate the profit spread and dollar value of profit in year 2, if the FI can reinvest its assets at 9 percent. (1.5 points) c. If interest rates fall and the Fl can invest in one-year assets at 6 percent in the second year, calculate the Fi's profit spread and dollar value of profit in year 2. (1.5 points) d. If interest rates rise and the FI can invest in one-year assets at 11 percent in the second year, calculate the FI's profit spread and dollar value of profit in year 2. (1.5 points)