Assets	Liabilities
Rate-sensitive	$40 million	$50 million
Fixed-rate	$60 million	$40 million

QUESTION 27

Refer to above table. If interest rates RISE by 5 percentage points, then bank profits (measured using gap analysis) will

		decline by $0.5 million.
		decline by $1.5 million.
		decline by $2.5 million.
		increase by $2.0 million.
		None of the above

1 points

QUESTION 28

Refer to above table. Assuming that the average duration of the bank's assets is 4 years, while the average duration of its liabilities is 3 years, a FALL in interest rates from 5% to 4% will cause the bank's net worth to ________ by ________.

		increase; 3.81%
		decline; 0.95%
		decline; 2.857%
		increase; 0.95%
		None of the above