a. What are the key steps in static GAP analysis? Explain the purpose of each step

and how a bank would use such analysis.

b. Consider the following bank balance sheet and associated average interest. The

time frame for rate sensitive is one year. All monetary values are in thousands.

Assets Amount Rate Liabilities & Equity Amount Rate

Rate sensitive 94,900 3.4% Rate sensitive 85,300 0.70%

Fixed rate 151,300 4.2% Fixed rate 171,780 2.20%

Non-earning 19,000 Non-earning 6,320

Equity 1,800

Total 265,200 Total 265,200

a. Calculate the bank's GAP, expected NII, and NIM if interest rates and

portfolio composition remain constant during the year. Explain how this

bank is positioned to profit if interest rates move in which direction.

b. Calculate the change in expected NII and NIM if the interest rates increase

by 2% during the year. Assess if this outcome is consistent with the bank's

static gap.

c. Suppose that, instead of the parallel shift in interest rates in Part b,

interest rates increase unevenly. Specifically, suppose that asset yields rise

by 0.4% while liability rates rise by 0.65%. Calculate the change in NII and

NIM and explain the outcome.

c. What are the strengths and weaknesses of static GAP analysis and how can these

be overcome by Senior Bank Management?

these questions are banking management questions, can you give me the detail and answers, thank you so much