Answer the simple finance related question. Disregard writing on page.

3. (6 points) A bank has the following balance sheet (in millions). Its duration of liabilities is 0.377 years. Cash Federal funds Muni S1 20 50 Duration 0 years 0.01 years 2.93 years 4 years Total A 271 Liahilities &equity Amount Duration Demand deposits S100 Repos CDs 0 years 0.01 years 50 90 De 0.377 years 00/ 2 7 / $31 271 Total L &E The bank's duration of assets (DA) is Workout: The bank's duration gap (DGAP) is Hint: DGAP-DA-k" DL, where k=L/A. Workout: 3,56 The bank's net worth (i.e., market value of equity) is exposed to interest rate risk. Given the calculated duration gap, will an increase or decrease in interest rate cause a reduction in net worth? Incense