5. (10) Your bank has the following balance sheet sorted by whether the asset or liability is sensitive to interest rate changes. Assets Liabilities Rate-sensitive $300 million Rate-sensitive$400 million Fixed-rate 600 million Fixed-rate 500 million a) If interest rates are expected to decrease by 5 percentage points, say from 8% to 3%, bank profits (measured using gap analysis) will: Answer: Increase/decrease: By $ 5. (10) Your bank has the following balance sheet sorted by whether the asset or liability is sensitive to interest rate changes. Assets Liabilities Rate-sensitive $300 million Rate-sensitive$400 million Fixed-rate 600 million Fixed-rate 500 million a) If interest rates are expected to decrease by 5 percentage points, say from 8% to 3%, bank profits (measured using gap analysis) will: Answer: Increase/decrease: By $