1. A bank has assets of $5 million that mature in 3 years and liabilities of $5 million that mature in 2 years where interest rates (fixed rate) are 7% on assets and 6% on liabilities. Suppose interest rates decrease in 2 years when the liabilities mature. Which of the following is most accurate (assuming a 3 year time horizon)?
   1. The bank benefits because it is cheaper to borrow now and assets remain at the same rate
   2. The bank suffers because it must reinvest assets at a lower rate while liabilities remain at the same rate
   3. There is no impact because interest rates move for both assets and liabilities