ABX PLC is a financial institution where the managers are so much concerned about the effect of interest rate changes on the value of the institution. During the year 2019, the financial statement of ABX PLC shows asset value of R200 000 000, while the total liability remains at R150 000 000. However, during the financial year, interest rate has increased from 10% in 2019 to 11% in 2020. The weighted duration of assets is calculated to be 2.50, while that of liabilities is 1.07. The rate sensitive assets and liabilities equate R75 000 000 and 55 000 000, respectively.

 

Please show all workings (step by step):

What is the Rate sensitive Gap of ABX? 

Calculate the NII and NIM of ABX during the two interest rate periods. 

Calculate the effect of the change in interest rate on the value of ABX PLC's, assets, liabilities and equity during the year?

As a financial analyst, what advice can you give to ABX, based on your calculations?