3. [30 points) For a bank with the following BS, calculate the Duration Gap (DGAP). Based on this DGAP, DESCRIBE what would you expect to happen to the bank's equity position if there is a 1% increase in interest in the market affecting all assets/liabilities (other than cash). How can the bank perfectly protect itself? (Hint: i.e., what strategies can the bank choose to set DGAP to zero?) oft MV 100 700 200 CPN % YTM %- Duration 4 0% 8% 8% 2.78 3% 3% 5.57% Assets Cash Com loans Treasury Total Assets Liabilities Deposits { 1000 + 620 300 1% 2% 1% 2% 16+ 2.94 CD 920 Total Liabilities Equity TL & EQ 80 1000 { 3. [30 points) For a bank with the following BS, calculate the Duration Gap (DGAP). Based on this DGAP, DESCRIBE what would you expect to happen to the bank's equity position if there is a 1% increase in interest in the market affecting all assets/liabilities (other than cash). How can the bank perfectly protect itself? (Hint: i.e., what strategies can the bank choose to set DGAP to zero?) oft MV 100 700 200 CPN % YTM %- Duration 4 0% 8% 8% 2.78 3% 3% 5.57% Assets Cash Com loans Treasury Total Assets Liabilities Deposits { 1000 + 620 300 1% 2% 1% 2% 16+ 2.94 CD 920 Total Liabilities Equity TL & EQ 80 1000 {