5.6 5.7 5.8 5.9 5.10 What is the impact on the bank's net interest income if interest rates fall 15 basis points over the next six months? How can the bank eliminate its interest rate risk exposure over the next six months via direct refinancing which involves equal amount on both sides of the balance sheet? And what is the dollar amount involved in each of the transactions? What is the duration of the floating rate mortgages? What is the duration of the 1 year Certificates of Deposit if they pay 2.75% p.a. interest, compounded annually? What is the duration of the 2 year commercial loans if they are selling at par? (Assume annual coupon payments.) What is the duration of the bank's assets, DA? 5.11 5.12 What is the duration of the bank's liabilities, DL? What is the bank's duration gap DG? 5.13 5.14 What is the impact on the bank's equity values if interest rates decrease 50 basis points from 5%? 5.15. How is this bank exposed to (i.e. to falling or rising interest rate changes)? How can the bank use direct refinancing to restructure the maturities of its assets or/and liabilities that would modify the DG and reduce its exposure to interest rate changes?